This is my ideal rental property (size, materials used, buy box)

Episode #305 – Ever wondered what it truly means to buy properties that appreciate, add value, or offer positive cash flow? Join me on a revealing journey as I unveil my ideal rental property criteria. Let’s demystify these concepts and empower you to tailor them for your market.

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Episode Transcript

[00:00]

I’m going to go through a list of ideal characteristics of what makes the ideal rental property for me in my town. Welcome to the podcast, Real Estate Investing with Coach Carson. I’m your host, Chad Carson. You can also call me Coach. And this is a show to help you build a profitable and passive rental property business so you can get out of the financial grind and do more of what matters. One of the hardest things about learning to invest in real estate is taking all the ideas you watch on YouTube or that you listen to it on a podcast and then translate those to the actual specifics of your situation on the ground in your town or your city where you’re actually trying to invest in. Sometimes you listen to an episode and they say, You know, you need to buy properties that grow in value or that you can add value to, or that have positive cash flow. That’s how you build wealth. But what does that specifically look like? So in this episode, I’m going to give you some detail. Now, the point here isn’t to say you should copy my criteria exactly, although you’re welcome to do that.

[00:59]

The point is going to be to get specific so you can see what actually is included in what’s called a buy box. This is a term that a lot of real estate investors use and they create one for themselves to help them find the ideal rental property. So my encouragement to you is after you listen to this list of specific ideas that I have is to make your own buy box. I’m going to help you learn how to do that today. So this topic of creating a buy box, your ideal location, your ideal property type is actually something I spend a lot of time on, two full chapters on. In the book The Small and mighty real estate investor. So if you go through this whole episode and you think this is something you want even more depth on, definitely check that out. I’ll have links to get the book in the show description, in the podcast description. And if you’re listening to this soon after the episode comes out, it’s actually available now on Amazon for the first time, on Barnes and Noble, on Audible. It’s been available for about a month on Bigger Pockets.

[01:49]

I just want to take a moment to thank many of you. Many of you watching on YouTube or listening on the podcast have already bought the book and you’ve reached out to me. I’m blown away. I had high expectations. I had high hopes for how the book would do. I spent six months of my life last year just writing it another 5-6 months preparing and organizing, and really 21 years of my life living and experiencing this and practicing it to put together the ideas that I would hope it would be a handbook not for scaling to the moon and being the biggest real estate investor in the room, but for being the best small and mighty investor who has the most lifestyle, the most time. How do you do that in a business model? So far, the feedback has been amazing from you, and I’m really honored that you would give the feedback. I want to read a little bit. Just a couple of comments I’ve gotten on social media. One said this is from Matt Ratkowski, Chad. I’ve read about every Bigger Pockets book and this is absolutely fantastic. I’m tempted to say this is my favorite real estate investing book of all time.

[02:46]

Thank you for sharing the knowledge. Amazing to hear that. Had another one from Beverly Rogers, Demons said, what a gem or diamond of a book. Chad has knocked it out of the park again. Thanks, Chad. Had another comment here from Mark Brogan said, man, I love this book. Thanks for the knowledge and experiences you’ve shared. And then I had a final comment here from Sean McKay said, This book is incredible, hands down the best real estate financial independence book I’ve ever read. So tons of those comments. It makes me happy. I love that, but it makes me happy most of all because I want all of you. If you haven’t read it, if you haven’t shared it with a friend, go check out the book. This episode, though, I want to give you value and understand what’s in the book. I’m going to share one of the best parts of the book, I think, which is the specific details of what I’m doing, sharing those stories so that you can then apply it. The information I’m going to share with you about my ideal rental property, the buy box for what I’m looking for in a rental property, is going to be broken down into four different areas.

[03:41]

Number one, we’re going to talk about the location of the property. Number two, we’re going to talk about the type of property, whether it’s single-family, multifamily, that type of thing. Number three, we’re going to look at the lot itself, which maybe you might not have thought about. I didn’t think about it much early in my career, but the value of most real estate is actually in the lot. We’re going to talk about that. Then number four, we’re going to talk about the materials, the types of materials used in your rental properties. We’re going to get into some nitty gritty and let’s start with location. You probably heard the old cliché in real estate: location, location, location. Your realtor has probably told you this. Your friend who invests in real estate has probably told you this. The reason it’s a cliché is because it is the foundational piece of value in real estate investing, of whether you have a good investment or a bad investment. I could talk for hours about this topic. I have, I’ve written about it. But I want to try to boil it down to you really simply about what I look for in an investment location.

[04:31]

I break it down into big picture, macro criteria. You could think about it like if you’re zooming out on Google Maps, the regional level criteria, and then I think about it on micro level, like street by street, neighborhood by neighborhood. On the macro level, if I had to summarize what I look for, I’m looking for major attractions or major economic centers. So major attractions. But what I mean by that is a reason for someone to come to this region. Typically that’s going to be jobs and the economy. People go to Metro areas, people go near New York City because there’s opportunity, there’s work, there are jobs, there are things to do. People also go to other parts of the country. People go to Yosemite National Park and areas around there because that’s an attraction that has longevity. It’s not going away. That’s a major place that people want to go to. Glacier National Park. I mentioned national parks because I have an investment that I’ve done with someone near Glacier National Park in Calisbell, Montana. Still a pretty small city, but there’s a major attraction there. There’s a major international airport that people can fly to from the rest of the country.

[05:35]

If you think outside the box and say regionally what you’re looking for typically it’s going to be jobs and economic center. I grew up in Atlanta, Georgia. Atlanta is an area of 6-8 million people. I don’t even know how many people it has anymore, but it is a major hub. You can think about it like a network of people, of jobs, of economy. It’s got infrastructure. There’s a ton of investment. You, as a small, mighty investor, are just trying to piggyback on that. You’re trying to go to the places where all the action is happening, and you’re particularly looking for places where there’s longevity. You don’t want something that’s going to be a fly-by-night type of place. You want some deep roots that aren’t going anywhere so that when you put your investment roots down, that you have some potential. You have some tailwinds to some momentum pulling you in the right direction. Honestly, you don’t have to do some deep research on the regional level to really understand this. You can just do some thinking, some analyzing, some reading, newspaper articles, trends to understand which metro areas, which regions have good potential. But that’s a starting point, thinking big picture or macro.

[06:37]

But think again like a Google map. You’re going to zoom in. And once you’ve picked a region that you like that has potential, you also want to look on the micro level. And one of the paradigms that I have learned that’s been really helpful for me and other students is you want to think about the major economic center is like the sun of the solar system. And then you’re looking, or at least what I’m looking for as a small, mighty investor, are these little satellite cities, these satellite planets, which are benefiting from the orbit of the sun. If you’re in Atlanta, Georgia, which is where I grew up again, Atlanta is the hub, that’s the sun. I really like the little small metro areas like Noonan, Georgia, where I grew up, or Fayetteville, Georgia. These cities that have their own economic centers, they have their own gravity there, but they’re benefiting from the jobs, from the momentum of the whole metro area. If you go to a place like Noonan, where I grew up, just that I happen to know well, it has a little town center, it has a hospital, has things going on.

[07:31]

It’s a place that people can live and not have to go anywhere. But they still have maybe one partner or spouse has a job in Atlanta, another part, or they want to go to the Atlanta Braves game. There’s still that attraction to the major city. If you’re a small investor looking for opportunities, the other benefit of these satellite cities is the prices are often less than going to the center of the city. You can be in the suburbs, but still have the character, but sometimes the walkability. I love walkable towns that are in those suburbs. If you could combine that, you also would get what’s called a better price to rent ratio, because that’s one of the most important criteria you’re looking for in choosing a location, is a price to rent ratio that’s not off the charts. You don’t want something like, for example, Metro San Francisco, California typically has a price to rent ratio of 50, maybe in the 40s, where the price has outrun the rent by a large amount. That’s not saying it’s impossible to buy in Metro San Francisco. You just have to look for satellite cities that have a little bit better relationship between rent and price.

[08:31]

That’s what I look for, look for cities in general that have a better price to rent ratio. But then satellite cities that are typically going to be in the suburbs, going to be a little bit more affordable. Then a final comment that I want to make that I look for on my Buy Box for a location to invest in on the micro level is something called romance. Now, this is an idea that I got from a teacher of mine early in my career named Greg Pinoeau. And what he said is when he’s looking for an investment property, he wants to have something that has this intangible quality of romance. What does that mean? It means it has an emotional attraction. And this is a fuzzy concept, but it’s very important because it’s fuzzy because every location in the country has a little different take on what romance means. But if you’re in a big city, it might be this block of the city is close to a park, is close to a bikeway, is close to a particular coffee shop or restaurant. There’s going to be some amenities or something that is a transportation hub that might make it have romance.

[09:29]

If you’re in the suburbs, it might be a little leafy green street with trees and mature trees. Maybe it’s a good school district, maybe it’s a park nearby. Every little thing counts. And the cool thing about real estate is when you’re picking locations on a micro level, it’s an emotional evaluation because people rent and buy houses on emotional level. Yes, there’s a price and yes, they have to afford it. But the things that attract them, the things that make the best investments are also the things that attract people to live in places as well. So if you can use your romance meter a little bit and add that to the quantitative part of real estate, that is what I have found to be the best locations to invest in real estate. I’ll give you one example of my own particular town. I’m in Clemson, South Carolina. It’s a college town. So it’s a combination of students that I rent to, but also faculty members. And one of the locations we’ve really farmed in within Clemson was walkable to the downtown area. So the romance for a college student is being able to walk to parks.

[10:26]

There’s a lake nearby to be able to walk to the downtown where the restaurants and are and the social atmosphere, the fun part of life, but also walk to the campus. We like to be within a mile, a mile and a half of campus. That’s a pretty long walk for some people, but college students can ride a bike or they can get on the bus. I like to be on the bus line. Those things, that convenience, but also the streets, the places we buy in are a little bit older neighborhoods that have older trees, feel a bit more walkable. The buildings feel not necessarily the brand new stuff with the big pools and the lazy rivers and all that. That’s a different type of investment in a college town. We’re looking for the older investments to have character that are walkable. And the walkability itself is the romance. That’s the appeal. And so we look for properties in those locations. And I’ll talk a little bit more specifically here in a minute about what types of properties we look for within that overall location. We’ve talked about location criteria. Now I want to move to the type of property that you buy.

[11:29]

This can be a confusing one, especially if you’re early in your career. Should you buy a single-family house, a duplex, a triplex, a fourplex? Maybe you should just go big and start buying 50-unit apartments or even bigger, start buying hundreds of apartment units. Or maybe you should buy mobile homes, RVs, the choices are almost endless on the property types you should buy. The first comment I want to make to you about this topic is a maxim or a principle that I’ve learned in 21 years of investing, having bought a lot of these types of properties. And it’s this, you should insist on value and be flexible on property type. Insist on value. I’m going to give you specifics of what property type I like. But the way I’m getting value in my market, Klimson, South Carolina, would probably be different if you plot me down in a different location, in a different city. I might have to adjust my strategy, the types of properties I buy. If I’m in a city where, for example, single-family houses are much more expensive, I might have to look to a different property type. So keep that in mind.

[12:26]

Be flexible on the property type, but always insist on the value. The value you financially get out of real estate investing, this is an investment for you. And remember, financially, there’s two main ways you are going to get value out of your real estate. You’re going to get income from the property and it’s going to grow in value. So income, cashflow or you’re going to grow your equity in the property. There’s only two ways to make money in real estate investing. If you’re not getting one or both of those, then you’re not getting value out of the property. So you’re always going to look for property types that deliver that value. You got to be flexible depending on where you are. With all that said, in my location in Clipson, South Carolina, which just to give you context, this is in the Southeastern United States, it’s halfway between the big city of Atlanta, the big city of Charlotte, so two hours in either direction. We’re nearby Greenville, South Carolina, which is a beautiful small city and near the foothills of the Appalachian Mountains. We’re near Ashville, North Carolina as well. But our little thing in our town is Climson University.

[13:25]

We’re a college town as well. I think we have about 20,000 people who live in the towns. We’re a very small college town. There’s 25,000 students who go to the university. We cater to retirees who live in town, that’s some people who live there, but mainly students and faculty and staff of the university. That’s our core customer base. What that means for us is I like best single-family houses and I like small, multifamily properties. I’m going to tell you a couple of reasons I like those in my case. The first reason is strategic. When I’m looking at real estate investing over the long run, I think of it a lot like a chessboard. In a chessboard, to be good in chess, you want to have a lot of pieces that you can move a lot of different places. If you just had one big piece, that’d be the equivalent of one hundred unit apartment building and that’s all you had. That’d be like having a big ship on the ocean. It’d be really hard to steer. There’s a lot of benefits of that, economies of scale, those kinds of things. But if you’re playing chess, it’s better to have a lot of small pieces that you can move around.

[14:24]

For example, you could sell one property, get the money out of that property, or choose to move to a different location. You can sell a couple of properties and then redeploy the money somewhere else. It makes you much more flexible. Small, mighty investors are flexible and we can pivot and we can move a lot easier than the big boats. Again, benefits of that too. But you don’t hear about that often when everybody’s saying go big and scale and get these big properties. Strategically, I love being the small investor with a lot of small properties. For me, that means single-family, small, multifamily properties, which also have the benefit of having good financing. You can get long term 30 year financingresidential financing on a house, on a one to four unit, which means when I’m going to sell that property, my buyer has access to the biggest, best financing market in the world, being able to get those loans. You can get loans on commercial properties, but it’s just a different animal that has to be played by a different set of rules. Those are strategic reasons I like small properties. The other reason I like it, if you flip it around and think about your end customer, think about all the different people you know, no matter what location you’re in, even if you’re in a big city, if you could pick your location and say, All right, I’m going to live in this location, which property type would you live in?

[15:35]

All things being equal. Most people would not say, I would love to live in this big tower of an apartment building, or I’d love to have people below me and above me in an apartment building. That’s not the idea of a romantic, beautiful location to live in. Some people settle for that because, Wow, this is an amazing location next to a park or in this view of the city. But if they had their choice, if they could live on that same location with a townhouse or a single-family house, even if it was simpler, but they had their own space, they had a little yard, who would not choose that? What that means is that you have a higher, you have a better selection of tenants. When you have a house in a great location, people want to live there. There’s a tendency to have a higher demand. If you start with the location criteria I talked about, and then you buy a house or even a small multifamily property, they can have a yard, they can have fewer people living next to them, and those are more attractive. I find it’s easier to have people, tenants, that stay longer.

[16:32]

I’ve had people stay in a house or a small unit for 5, 10, even longer than 10 years. I have a mentor, John Schab, who wrote the book Building Wealth One House at a Time, who’s had tenants stay 30 or 40 years in one house. And what happens is, practically speaking, they have more storage in that house, they put stuff in there, they get settled, they like the neighborhood, and they don’t leave. It’s a good place to live. So houses, if you have people staying in your properties for many, many years, you make money as an investor, it’s also good for the tenant as well. That’s a win-win relationship. When you combine those two things, for me, if you can get the financial benefits from it, if your location allows it, single-family houses, small, multifamily properties are the ideal for me. Now we come to the third category within my buy box for what makes an ideal rental property. We’ve talked about the location, we’ve talked about the property type. Now I want to talk to you about the lot itself. A lot of times you might not think about the lot. I know I didn’t until one of my mentors, John Schab, who I mentioned earlier, who wrote building wealth one house at a time, he used to talk about the fact that when you buy an investment property, it’s not the house itself.

[17:39]

The sticks and the bricks. That’s not what goes up in value. In fact, that actually breaks down over time. You’ve got to keep putting money into it to keep those sticks and bricks together. The lot, the location is what goes up in value. That’s why I spent so much time talking about the number one criteria of a location, both on the macro level and the micro level. It’s the one thing about your property you can’t theoretically get up and move. You could theoretically cut the foundation of the house off and move the house somewhere else. I’ve seen people do it. It’s pretty interesting to watch moving a huge brick house on the back of a truck. Not easy to do, not typically financially feasible or it doesn’t make sense to do that and make a lot of money off of it, but it’s possible. But that’s not going to make you a lot of money. The lot itself is the thing that if you buy it correctly, is in demand. It’s a limited commodity if you’re in the right location. You want to think about the lot itself. The first thing I like to think about is the size of the lot.

[18:34]

I would differentiate between single-family houses and small apartment buildings or larger apartment buildings for what makes a good lot for me. When it comes to a single-family house, it’s nice to have a big backyard. It’s nice to have a fence thin backyard, but I don’t want to have too big of a lot. I want it big enough that my tenant can enjoy it, get some satisfaction out of it, have a garden, perhaps. That’s a really nice part about having a house and being able to do that stuff. But the bigger you get, the more trees you have on the lot, the more bushes that have to be up kept. Either your tenant has to keep them up, which doesn’t always happen, or you have to do that yourself when the property turns over and there’s always a cost to maintaining something. And that’s a theme you’re going to hear both with a lot and also the building that I’m going to talk about next, the criteria for a good rental property building. The smaller, more efficient buildings typically make more money. So you’re always looking for something that’s big enough to satisfy your tenant and to get the best tenant, but not so big that you’re having to put a lot of money into maintenance.

[19:31]

And so lots are the same way. Now, when you get into multifamily properties, I like even smaller lots than that. Especially if I’m buying in the right locations that are walkable, that are on bus lines, in my case in Clemson, having an extra big lot for my apartments is not beneficial unless I could redevelop it, which is some cases, that’s the asterisk in this rule. I like to have small, efficient lots unless you have future plans to redevelop the property. If you had a 10-unit building on a lot, just a couple acres and you could build 50 or 100 units on that property, there’s a ton of value in that potential to redevelop the property. And in that case, having a bigger lot is even more beneficial. You’re going to lose some on having to cut the grass all the time and maintain that property on the short run, but you’re going to make a lot of money over the long run because of the zoning. There’s a give and take there with the size of the lot and the density you can get out of it. But in general, when you’re thinking about it from an operational standpoint, I like to have the smallest, most efficient possible.

[20:30]

Another thing I like to think about with lots is water. I’m in an area of the country that rains a lot. We’re almost in a rainforest near the foothills of the Appalachian Mountains. Rain is a problem. Water is a problem. Most of the big long term maintenance problems that we have with rental properties relate to water going somewhere. Sometimes that means there’s a leak inside the house or there’s too much moisture inside the property, but often it’s because the slope of the lot. Ideally, I like to have a property that sits higher than what’s called the grade of the road. You think about the level of where the road is. If you have a property that is sitting below the grade of the road so that water can run downhill to that property, that’s a negative. I have a couple of properties that fit that criteria, that negative criteria, and they give me more heartburn than my other properties. I have other properties that sit up four or five, 10 feet from the road, and guess what? All the water runs off the roof, it runs down the lot into the road, and it goes somewhere else.

[21:28]

Whereas if the property that is sitting below grade, I have one that’s at the bottom of a neighborhood, entire water from the whole neighborhood runs down to my lot. We’ve had to dig ditches around the property, do waterproofing. We have to redo that. And yes, there’s ways to solve those problems, but it’s another maintenance cost and it’s another thing that could break in something you have to think about. Adding to that with water, I would like to have a property that’s not in a floodplain. Pretty simple with that criteria. Yes, I know there’s insurance out there and you can deal with it, but just a non-factor for me. I don’t want to be in a floodplain. I don’t want to deal with it and worry about it with my rental property. Another criteria with a lot are trees. Trees are beautiful. I love trees. I consider myself a tree hugger. I go out hiking and I like to sit under trees and I enjoy it. But when you have a rental property and you have big trees next to your rental property, guess what? They drop limbs on your house. They tend to fall down during storms and that causes problems.

[22:24]

Even if you have insurance, you have deductibles on your insurance and you don’t want to make a bunch of claims on insurance. Having insurance for clamities is good. But if you have trees that are always falling and causing problems, it could be a big expense. I’ve looked at all my properties, the ones that have big trees next to them are causing much more problems, much more cost over the long run than properties that don’t have big trees next to them. There’s a balance here because there’s a lot of character having big old oak trees, for example, in our area, but it’s also a big maintenance issue. I would rather have the oak tree on the lot farther away from the house. People can sit under it. They can do a swing or whatever they want to do. But not having to be next to the house with the roots and the limbs and the storms are a big concern. The final thing I’ll say about criteria for lots is that when I own a multifamily property, I like to have as few amenities as possible because those are another maintenance issue. This seems counterint, too.

[23:19]

You might think, hey, wouldn’t you want your tenants to have pools and to have things to do on the property that are attractive to them? Yes, that would be nice to have. But what I want to have is I want to have the location itself be the amenity. I want to have parks nearby. I want to have a downtown nearby. I want the lot to be small and efficient and a great location near public transportation, walkable, so that they can go to these other places for the amenities that are paid for by the town, by the community, by our property taxes, but not me having to maintain that amenity on the property. That’s just a very particular criteria for me with small, multifamily property, but just something to think about if you’re making a list of criteria. Now we come to the fourth category within my buy box, which is the building itself. We’ve talked about the location, we’ve talked about the property type, we’ve talked about the lot. Now I have some specific criteria on the type of building and the characteristics of the building that I buy. Now with a single-family house, I like for something to be big enough, but again with my theme of maintenance and efficiency, not to be too much.

[24:29]

That tends to be a house in the 1,500 square feet to 1,800 square foot range. If you think about that size-wise, you’re having a hard time imagining that, it’s half the size of a tennis court. Now why 1,500 to 1,800 square feet? It’s just big enough to have a three-bedroom, two-bath layout. That’s an ideal for me with a house. I like to have a garage as well. If you add the bedrooms plus the garage plus as much storage as you can get, if you had a storage unit, people putting stuff in the storage makes them comfortable. They want to stay for a while. They don’t have a bunch of storage units somewhere else. So in the interest of them having a place that they enjoy and stay for a long time, single-family houses, it’s an ideal size. If you get above that size, you start getting to 2,500 square feet, you might think that’d be more attractive. Yeah, people would like more space. But think about it now. You have two heating and air units that you have to replace and maintain. Every time that property turns over, you have to paint even more wall space.

[25:24]

You have to replace even more flooring. There’s just more things to break. This is always a game of desirability of the property versus size and maintenance. If you look at it on a money per square foot basis, how much return are you getting on a per square foot? A smaller property will do even better. The best rental properties I have are very simple, rectangular boxes. That’s another criteria I’ll go into. I like simple layout. I don’t want the fancy, complicated roof line with all sorts of lines. That might be beautiful. An architect might make that and think that’s a wonderful place to display, to be attractive. But as a rental property investor who’s looking for efficiency, you want a nice, solid, good looking house, but you want a simple roof line. A rectangular box with a nice pitch roof, meaning not a flat roof, but having a pitch that rain can run off, is ideal in my location. That’s what I’m looking for. I’m also looking for that rectangular box to have a crawl space because when you have a crawl space, you can get underneath to deal with the plumbing, to fix things, to be able to get access to the rest of the house.

[26:27]

I have some properties that are on slabs, not many, but a concrete slab underneath the house is what a lot of new construction is built on. But think about what happens if you have a plumbing issue. You have to jackhammer the floor. You got to get a big jackhammer, somebody does, to dig up that pipe and replace it. Now, that doesn’t happen very often, but the maintenance on that is a much more complicated thing. I’ve also had houses because they’re on a slab and if things get really cold in the winter, we had pipes in the walls instead of in the crawl space. Those walls froze and the pipes burst and the water came out the side of the house. It depends on the construction, how well insulated it is. But I like crawl spaces. I like rectangular houses, simple roof lines, efficiency. That’s the type of property I want to buy. All of that was the single-family house criteria. Let’s switch to small multifamily or just think about an apartment specifically. A two-unit, a duplex or a threeplex or fourplex, or even a larger apartment building, you could break it down into the basic unit is an apartment.

[27:26]

For me in my town in Clemson, South Carolina, I really like the smaller apartment units. I like one-bedroom, maybe a two-bedroom apartment. This is very niche for my customers. I have grad students, I have more mature college students who are living, remember, in these walkable areas or places where they can get on a bus. For them, being able to live by themselves without a roommate is typically more attractive for them than having a three or a four-bedroom apartment. It’s typically just harder for them to find three or four roommates. This has been a trend that when I was in college, people would team up and go buy a house or rent a house and have four bedrooms and that was what they did, or they get a four-bedroom apartment. The trend has been a way from those larger apartment units, at least in my area. And so people want the one-bedroom, they want the studio, then with the two-bedroom that they could have an extra bedroom just for friends or to sublease it out or something like that. And so that’s the property we’re looking for for our customer. And the smaller, the better. Just like with my single-family houses, if you have a 400 square foot apartment or a 700-square-foot two-bedroom apartment, that’s going to be much more efficient on a rent per square foot basis.

[28:34]

If you’re looking at it on just return on investment, return on the maintenance you have to do, the paint you have to do, the amount of heating you have to do, the smaller units are going to be much more efficient. You’ll find a sweet spot there. For us, those studio one-bedroom, four to 500-square-foot apartments are great. Then for a two-bedroom apartment, 7, 750, maybe 800 square feet has been the ideal size for us. Let me say a couple more things about building. You might be thinking, man, you’re getting really detailed here, Chad. You’re giving all sorts of criteria. When I first started, I didn’t have all of these criteria. A lot of these were mistakes I made. I bought a property that had one of these things that I didn’t like, and I learned from that and we sold that property. Over time, we’ve called out the bad properties or the ones that were less ideal to where we had the properties that had these best criteria. Then when we buy new properties, we have a list of things that worked really well from the other properties. If you’ve never heard of this, if you don’t have quite as detailed of a list, that’s okay.

[29:27]

Remember, you can borrow some of these if you like, if your market happens to be similar or what I would recommend, and I’m going to give you a takeaway. You can download a PDF at the end of the episode. I’ll give you a link. It’s actually in the show notes. You can check it out where you can get a copy of my basic buy box, some of these basic criteria to use for yourself. I would take the principles, the ideas, the categories, and then go look in your market and figure out what works for you. But back to the building itself, I like to have properties have simple layouts. I have bought properties in the past, a couple of them that I can think of that had weird layouts. For example, where you walk into one bedroom to get to another bedroom, or you walk into a bedroom and there’s no closet or there’s just a tiny little weird closet, or just a number of other things where they converted to space that used to be a garage, but they turn into this weird big bedroom or room that doesn’t really make sense. There’s good ways to convert garages and there’s bad ways.

[30:22]

So the point is, if you have weird layouts or somebody did their own handy-person remodel and it just didn’t work out, those are the things you want to avoid or either budget money to fix that. So that’s another thing that I look for my criteria for the building itself. And then finally, under this theme of low maintenance, which you’ve heard throughout my criteria, I like to have building materials that are low maintenance. So on the exterior of the property, my ideal property is a brick or a masonry property on the outside. So the walls are typically brick. Those are my favorites. I like it if the trim of the property and the windows are either metal or vinyl. Those are surfaces that are not wood. That’s the theme. So if I have wood properties, if I have wood siding, wood trim, it’s beautiful. I love wood looks, but you have to paint that. Three to five years, you’re going to have to do some work to it. So it’s just more cost. It’s more hassle to have to do it. If you have a low maintenance exterior, it’s a lot easier to deal with with a rental property.

[31:18]

The same applies to the inside. If you have materials like flooring, if you have hardwood floors, tile, if you have luxury vinyl plank, those are very durable, versatile materials. You can think about the same thing with really anything you use, whether it’s plumbing or electrical. You want to go with materials that are going to last longer. If you buy cheaper materials or ones that you have to redo often. For example, flooring, if you had carpet throughout your house, that’s nice. That’s nice to walk on it. I typically have carpet in the bedroom, But if you’re going to have it on surfaces, like in the living room, in the kitchen, people spill Kool-Aid, people spill wine, there’s just things that they walk in and then track in from somewhere else outside, you could have a brand new carpet that has to be replaced a year or two later. Yes, you might have some security deposit, but what if you can’t collect enough? What if it costs you a lot more than security deposit? It’s just better to build your rental property or buy it that is much more durable and the materials are much more durable.

[32:12]

This is just a small thing. You might think this is just like a checklist that you would have just a tiny little thing. That can mean a big, big difference in having a $50 per month maintenance budget for a property and having a $200 or $300 per month maintenance budget is these types of decisions. I had to take a deep breath there. I felt like I was going through a list one after another, one detail after another. But I hope that detail, that level of depth was helpful for you. Because my goal here, if we go back to the very beginning, is that you get information on the Internet, you get YouTube videos that might go into specific techniques of how to run the numbers. You might get specific techniques of how to make money over the long run and build wealth. But what does the property itself actually look like? That’s where the rubber meets the road. And building a buy box, building your own buy box, using what you heard today to make a list of criteria that you can use is the takeaway. That’s the call to action of this episode. And to help you do that, just to offer a free resource for you, I’m going to give you a free PDF of a simplified version of what my buy box that I went over today looks like.

[33:12]

And so if you just look in the show notes or the podcast or YouTube description, I have a link at the top there where you can go and get that for free. Use that as a starting point for creating your own Buy Box. One of the best decisions I ever made was to start putting in writing what my criteria were for a good property. Now I did the same thing for running the numbers, which I talk a lot about here on this channel, what makes a good deal from the numbers standpoint. Today was all about what makes a good deal from the property itself and the location itself. But here’s the thing, the clear you get about what it means to have a good deal for you, your particular buy box, an interesting thing happens. You start noticing it more often. It’s like when you buy a Toyota Avalon, which is the type of car that I happen to drive. All of a sudden you get a Toyota Avalon and you start seeing the same color, the same type of property all over town. Now, why is that? Is it because more people are driving the Toyota Avalon?

[34:06]

Or is it maybe because there’s this part of your brain called the reticular activating system that when you tell it, This is what I’m looking for, it starts noticing it. It’s like you put an detective, an auto detective on the case. You building a buy box criteria tells your reticular activating system as a real estate investor, This is what I’m looking for. You’ll be looking for it when you’re looking on the MLS, when you’re talking to your friends. I even put an email PS in mind. This is a good little takeaway tip. Build a summarized version of what a buy box is for you. Have a PS that says, By the way, if you ever run across a property like this, single-family house, small, multifamily in Clemson, I’m always looking for these, please give me a call. Here’s my number. Let me know. Even if it needs work, I’m happy to buy it. Something simple like that. I have bought properties off of that PS, which I’ve had for many years. And this is when you’re applying to family, to friends, to realtors, to whoever. That’s just an automatic thing. You could put that in your Gmail, but that starts with the buy boxes, helping you identify what it means to have a good deal so that you and the people in your world can bring these deals to you.

[35:11]

I hope you see the value of this idea. I hope you see the value of getting granular with your real estate investing business. This is what I spent the meat of The Small, Almighty Investor writing. If you’re not watching this on YouTube, I’m holding up the book and showing how thick this 337 page book was. Two chapters of the book were on these topics. I had a lot more to say about it. But the theme here is if you want to be a good real estate investor, the details matter. Yes, there’s the big picture strategy, but you got to get into the tiny stuff. The tiny stuff matters. Whether you’re in real estate investing, whether you’re in sports, it’s those little details that if you get good at them, if you study them, if you copy other people, model other people who are doing this, and then you replicate that and go out there and do it in your market, that’s where big success comes from, these little tiny steps. I hope you found that helpful. I would love to get feedback from you. If you’re listening to this on the podcast, send me an email at [email protected]

[36:03]

If you’re watching it on YouTube, leave me a comment below. I’d love to hear some feedback from you if you have any additional questions. And if you hadn’t got the book yet, I want to keep saying this, but this is the manual. Everything you’ve heard here and the best of what I’ve learned for the last 21 years is in that book. And it’s going to be something that I’m going to continue to go back to on this episode of the podcast. If there’s other topics that you’re interested in within the book, I’d like to go into depth and teach almost like an extended audio version of the book for free here on the podcast, just going in-depth on the different topics that I covered in the book. If you like that idea, let me know as well in the comments. I’ll see you in the next episode. We’re going to have more interviews coming, a few more solo episodes as well. But I’m really excited about the content we have coming the rest of the fall here on The Real Estate Investing with Coach Carson Podcast. See you next time.


Links

► Coach’s Buy Box Example: https://coach-carson-llc.ck.page/82360ef9b8

► Small and Mighty Real Estate Investor (Amazon): https://www.coachcarson.com/SMREI-amazon

► Small and Mighty Real Estate Investor (BiggerPockets) – 10% off with coupon code CHAD: https://biggerpockets.com/smallandmighty

 


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