Hello, my friends. And welcome to another episode of Passive Real Estate Investing. I’m your host, Marco Santarelli.. Welcome back to the show. You know, it’s interesting. What, if you could talk to an attorney and ask him their thoughts about finding funding and managing real estate investments? Well, I recently came across a person who does exactly that they are an attorney with a real estate tax firm, and he just released a book called Replace Your Income: A Lawyer’s Guide to Finding, Funding, and Managing Real Estate Investments. So I thought, well, why not interview this person and find out how they think and what they would say to what I would think are some pretty common questions, but I just wanted to get his perspective and pull some stuff out of his mind and essentially get a lawyer’s view on things. So it was an interesting interview.
I recorded the interview before I’m doing this intro here, but I think you’re gonna have some takeaways. Some of it’s basic, some of it’s a little more advanced and some of it’s kind of a fresh perspective. One of the things he actually mentioned is how he was shifting from long-term rentals, not entirely to a small degree, but selling off some of his long-term rentals and moving that I believe he did a 10 31 exchange. I didn’t actually ask him that, but moving that equity into other real estate properties that he turned into short-term rentals. So obviously location is critical and key in that strategy, but he identified some properties. He could pick up in markets where short-term rentals made sense, and he essentially increased his cash flow and income from the properties by doing a 10 31 exchange, I assume out of some long term rentals. So I don’t talk to too many people who actually do that.
A lot of our investors have long term rentals and they build a portfolio of those long term rentals. And then they start to diversify their portfolio into some short-term rentals, which is actually exactly what I did not too long ago, just within the last couple of years. So now I’m mixing it up, but I never heard of anybody actually selling off their long term rentals to move into short term rentals. So I thought that was pretty interesting, but I’m sure you’ll enjoy today’s interview with Brian Boyd. And with that, let’s move on to the interview. Oh, and just a quick reminder, before I forget we have our power room event coming up in, I think, three weeks in Lake Tahoe. So if that’s something you’re interested in, it’s not too late, just go to power room.com and fill out the little application form and Annie will contact you and you can come as my guest.
There’s no cost, there’s no obligation. We do this for guests that meet certain criteria one time, and I would love for you to be there and get to meet you. So that’s power room.com and our next event’s in December in Las Vegas. And then we will be moving it back to our home base, just south of Jacksonville, Florida. It’s actually insane Augustine, but it’s part of the Jacksonville Metro area. So would love to see you there anyway, with that, let’s get to our interview with Brian Boyd.
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It’s my pleasure to welcome Brian Boyd to the show. He is the owner and managing attorney of real estate tax firm, Boyd and wills, which they help individual and businesses in all matters relating to residential real estate, commercial real estate, construction litigation, and business law. He’s also the author of the new book, Replace Your Income: A Lawyer’s Guide to Finding, Funding, and Managing Real Estate Investments. And I love that title with that. Brian, welcome to the show.
Thank you for having me, Marco. It’s a pleasure to be here.
That’s great to have you on it was it was fun and interesting chatting with you about what you’ve been doing in the real estate world and actually where you live and how many new Yorkers are in Californians are moving down to Tennessee. I guess you’re really happy about that, huh?
Yeah. They’re for the most part they’re, you know, acclimating, well, I think they’re getting used to the humidity, but you know, we like to say we chew our air before we breathe it during the summer and you know, they’re, they’re getting used to that right now.
Nice. Nice. Well, Brian, let’s start off with you telling us a little bit about yourself.
Sure. I went to the University of Tennessee at Chattanooga. I’m from Chattanooga, Tennessee, graduated with a history degree and went straight to business school. After that, while I was working during the day, and then I was roommates with some lawyers and I really liked their knowledge base. So I decided to go to law school and I graduated from Sanford university in Birmingham, Alabama in 2004, and then I couldn’t get enough of law school. So I went back to law school in 2004 and got a master’s in law. Particularly in taxation. I graduated from Georgetown university’s law center in 2005. It went straight to work for Ernston young in Washington, DC crunching numbers and doing tax returns, eventually F MOH to Nashville a law firm here and then 2008 hit and the world fell apart for transactional tax attorneys. And I don’t know if you remember 2008, but I remember it vividly because I lost my job and just started all over again.
And eventually picked up a few clients that are contractors and I’m happy to say one of them is one of the largest builders in Nashville and he’s doing tremendous. And that kind of got me into real estate. I pressured and pressured and pressured my wife into buying real estate. And in 2007 team, we bought our first short term rental. And then within two or three months after that, we started buying single family homes. A year later, we sold that first short term rental involve 13 single families with it. And we just have kept growing and kept growing and kept growing. And now I talk with clients all the time about real estate investing the generational wealth. It creates moreover it also creates tax benefits. If you’re self-employed or an entrepreneur or a small business owner, there are tax benefits to real estate that you just cannot find anywhere else in any other investment vehicle. So now I work with a lot of entrepreneurs, small businesses, dual income, families, professionals, blue collar workers, anybody looking to create more than they currently have. And when I do this, I also encourage them to think about the other side of the coin. Okay, you are now providing somebody a place to live. That’s gonna be their home. Remember there’s a human component to this too. So bear that in mind, as you manage this property and manage this investment, don’t, don’t forget to be human with these tenants that are paying your rent every onth.
Nice. Was that what inspired you to write the book or was it something else?
<Laugh> it was actually something else inspired me to write the book. What I found was I was having the same conversations multiple times a week, and the same questions kept being asked of me. And so I initially started writing an FAQ of frequently asked, you know, she like, Hey, these are the questions. Most people ask me, you know, you don’t need to spend your hard earned money paying me for an hour of my time to ask me these questions that I, I basically had just answered yesterday. So it started with that. And then I was asked to write a bimonthly blog for a real estate company, started doing that. And I had outlined all these FAQs and I started flushing them out. And I was like, oh, well that actually goes down this way. And then this goes down this way. I started looking at it like a lawyer outlining for a law exam. And eventually I had 50,000 words. So I was like, well, maybe I should turn this into a book and just, you know, sell it instead of my time, I can just sell the book. And that’s what this became. It became 18 months of fleshing it out and then writing the book.
Nice. Well, let’s talk about that. I love the title and I like how you break it down into like finding funding and then managing real estate investments. So let’s just dig into those three categories to some degree. So let’s begin with this over the last couple of years, we’ve seen on average across the country, approximately a 20% appreciation rate over the last two years, not including, you know, where we are today, but up until this point. So home values are pretty high. Inflation is still pretty high. It’s been, you know, abnormally high. It’s called it a 41 year high as of recently. So with high home values and high inflation, do you think from where you sit and what you see in the clients that you talk to? Is it still a good time to buy real estate or invest in real estate?
I’ll say this. I am encouraging all my clients to buy, to buy now to keep buying real estate interest rates or mortgage interest rates are gonna come back down and you can refi back after that, but what the inflation has done and what the mortgage interest rates have done, it has shaken out some people. So the competition is less. Moreover, it’s also soften the market just a little bit, but I wouldn’t actually call it softening. I would say it’s reverting back to normalcy, but these are our new highs house value highs. I’m encouraging everybody to keep buying, buy more, buy now, keep buying the deals are out there. In fact, they’re becoming more and more prevalent because people are offloading properties that they otherwise would’ve held onto. Maybe they got into an adjustable rate mortgage and that’s starting to adjust and they just don’t want it anymore.
Go buy it. In fact, I think I was telling you earlier, my law partner just bought a duplex for $42,500. He got out bid on his first bid into it and he came back lower when they said the deal fell through. Well, the deal fell through because the financing fell through the financing fell through because the mortgage interest rate moved during that period of time. So he was able to go in lower and steal that property. For the most part, he’s gonna rent out each side for $800 a month, that $1,600. And that’s a win. Those deals are out there. They are still out there. And if he had stopped looking, he wouldn’t have that deal now.
Yeah, no kidding. Well, that’s a pretty low price. I’m I’m almost afraid to ask you where that’s located. <Laugh> it’s probably.
It’s actually in one of the bigger cities in Tennessee, you’d be shocked.
No kidding. Well, that sounds like a steal of a deal, cuz you don’t typically find properties that are, you know, sub $80,000 in a larger city, unless you go into a war zone. That’s you go
<Laugh> yeah, this is not a war zone. And I know exactly what you’re talking about. I’ve had properties in war zones. We looked at the neighborhood there. We really checked out the demographics and this property works just fine for him.
Yeah. You know, something worth repeating. I know much of my audience has heard me say this before, but there’s always new listeners and there’s also people who don’t necessarily listen to the entire episode or every episode. But you know, when I get asked, the question is now a good time to buy or invest in real estate. I say it’s always a good time to buy because it’s not a question of when to invest in real estate. It’s a question of where to invest in real estate. The deals are always out there. They’re there to be found, but it’s just a matter of, you know, putting in the sweat and equity and time that you need to put into it to find it or have the right team, which we’ll talk about later. Cuz I know you’re all you’re big on team. So let me ask you this. You know, obviously you’ve got commercial residential, you focus on both as an attorney. Do you have a preference over one and how should an investor decide what type of real estate to invest in? If they’re not sure which direction to go clearly I’m biased. You know, I love residential real estate for so many different reasons, but I wanna hear your thoughts and your perspective.
So I tend to follow your line of thought. I love residential real estate. I love short term. I love long term. I love single family. I love multifamily. I love residential real estate. When you get into commercial real estate, it’s a little bit different. You’re getting into triple net leases. You’re getting into zonings. You’re getting into things outside of your control that you really can’t deal with. You know, if you’re buying a big box location or you’re, you’re renting out a big box location, you’re tying up so much money in that. And I love being able to take a hundred thousand dollars and buy multiple properties. Whereas a hundred thousand dollars is just a drop in the bucket for a commercial real estate endeavor. That’s why I like residential real estate. I think the returns are, are tremendous. I think what you do for people is wonderful. I think you can scale much quicker with residential real estate than you could with commercial.
Yeah. I, I completely agree. Speaking of scale, you know, one thing I think you mentioned in your book and as I told you before, I haven’t read your book. I haven’t had the time literally because this was more of a recent booking for my interview with you. But what advice would you give investors, whether seasoned or new on expanding their rental portfolio and how to do that quickly? You know, there’s different strategies out there and different ideas. I have my thoughts, but what would you tell somebody on how to expand a rental portfolio quickly?
So I, I know that there are some people out there that believe you need to pay off all your properties. I am not an advocate of that theory. I like taking equity from my properties and using that bank’s money and buying more and more properties and allowing the appreciation to keep growing because the Delta between the purchase price and your equity is gonna keep growing as you go through the months and the years and that Delta of equity between appreciation and, and debt pay down, keeps growing. Don’t leave it locked in that property, never leave it locked in that property. As long as the rents can service that debt and you’re making a profit every month, keep borrowing from that property. We just did this with our Chattanooga portfolio. We were all in, in Chattanooga for $555,000. We put $400,000 for our own money into that portfolio.
We’re able to take our monthly rents from $10,250 to $17,500. We did a cross-collateralized loan for 1.1 million and now we are cash-flowing 17 five in our monthly payment. For that note at $6,900, that’s a win where previously we were using, you know, $4,000 of that 10,250 to service the debt. Now we’ve doubled what we’re bringing home net profit every month mm-hmm <affirmative>. So I didn’t put any more money into that. I, I borrowed from our home equity line of credit. When I refinanced, I paid our home equity line of credit back and now the tenants are paying this note for us. And we’re, we’re doing a complete reconstruction of one of the properties, taking it from a one bedroom to a two-bedroom. And that portfolio is gonna keep growing and doing well, but at the same time, other than borrowing from our home equity line of credit, which again is the bank’s money. At this point, we haven’t written any personal checks. This is all the bank’s money we’re using that Delta to keep scaling and scaling and scaling. And now that we have our Helo back, we’re looking at, get into it, getting into a 60-unit apartment complex north of Nashville, and we’re gonna do the same thing again and again and again and again, and that just scales our doors. And as long as I’m making at least a hundred dollars a month in profit, I’m winning cuz it’s a hundred dollars a month. I’m not working for mm-hmm
<Affirmative> and that’s a great strategy. Something that, you know, I love teaching investors, how to do, and many people are still unfamiliar with the fact that you can, if you have enough equity in a property, tap into that equity through either a refinance and pull that cash out, that equity out tax free, by the way, and redeploy that into more property. So when you ask the question, where do I get the down payment from? Well, you can increase your income, which is a smart thing to do anyway. So you can save faster and have more down payment capital to deploy. But what if you could tap into your rental properties in your portfolio and use that as down payments, if the numbers pencil out and they make sense, it’s a great strategy because that’s how you accelerate the speed of the portfolio that you build.
So I’d love to hear that you’re doing that because it’s such a great strategy. And it’s also brilliant for people who are in expensive markets, like coastal markets, where they’re what I refer to as equity rich and cash flow poor. So why not make use of that dormant equity? Anyway, that’s great to hear now in terms of finding properties and deals, you know, we obviously provide a service to make it completely simple, easy, and turn key for investors, but there are so many strategies and so many ways to find properties out there. Do you have any favorites or do you have any tips or secrets to finding rental properties that are worth owning?
I won’t say I have any secrets. What I will say is it’s going to require a lot of legwork, anything from looking@themlstorealtor.com to Zillow, to driving neighborhoods, but where I have gotten my best deals, they’ve always come from my network. You know, we have two short term rentals up in Gatlinburg, Tennessee that just stay rented. Both of those came from either a former real estate agent or a property manager. And that’s part of our team. My team calls me all the time like, Hey, I’ve got a client. They’re looking to offload a property. Are you interested? And it may be, Hey, I’m not, but I have a client that’s actually looking for something like this. Let me put you two together. And there’s the deal. I don’t think people utilize their team enough to find that synergy that actually exists for your benefit. For example, your real estate agent, your insurance agent, your banker, your bookkeeper, your accountant, they know people. And those people probably have real estate and are looking to sell. And I just don’t think enough people tap into their own network because they take it for granted. They only think of the banker as the banker. They don’t think of the banker as a person who has a social life and has neighbors and those neighbors have investments and they might be trying to offload a property. You just have to ask. And I think if more people would ask, they would find those deals.
Yeah. I like what you said. And you’re talking about having the right team. How does one go about building that team to help them grow their real estate business?
I, I promise you, I kissed a lot of frogs along the way, especially with the right accounting firms, you know, coming from an accounting, big accounting firm background. I can talk the talk with, you know, attorneys and accountants. And I know what I’m looking for. And I used, you know, one of the large local accounting firms, I used a, a national accounting firm, terribly disappointed in both of them. It was a mom and pop shop that I talked to this lady and we talked for two hours and we talked about cost segregation studies. And we talked about depreciation schedules and we talked about capitalizing expenses and she knew everything I was talking about. And at the end of that conversation, I said, then I want you to do this for me. And we probably talked two or three times a month about where are you?
What did you just buy? What did you just do? Did you pay off a loan? Did you get another loan? She kind of keeps her hand on the pulse of my business and that is wonderful. And the same is true for bankers. You’ve gotta find the right banker for you. I’ve got four. I, I have a, a national bank. I have a local bank and I have other small banks in between. Not all of them have the same pro products. And I think you’ve gotta find the right product for you and your business model. I’ve been really happy with my local bank, terribly happy with them. Probably won’t ever leave them now, but it took a lot of starts and stops along the way to get there. So my advice to people is meet with these people, sit down with the lawyer. You know, if they wanna charge you a consultation fee, charge the consultation fee, I would rather, you pay a little bit of money up front and find out that’s not the right fit than hire that person.
And find out later that is a terrible fit. They don’t understand what I’m trying to do. The same is true of accountants. The same is true of insurance agents. The same as true of bookkeepers. You’ve got to meet these people. You’ve got to find out, are they right for you? Do they understand what you are trying to achieve? And that’s so important. Your vision for your business is in your hands and putting your team together is your responsibility. Don’t just take a recommendation, go meet with that person and then go meet with somebody else and figure out what is right for you. Getting that team in place is so critical to success.
Yeah, it really is. I have to echo what you just said because I always talk about team and how important it is. You put yourself at the center of that wheel and you build your team around you, which are the, you know, five core people which are five spokes, but then, you know, you could build beyond that. So yeah, team is critically important. You made think about something. Then one of the spokes on the wheel that I refer to is, you know, your acquisitions team or your acquisitions person. And you mentioned real estate agents, but you also mentioned sources like realtor.com and the MLS and whatnot. I’m curious to know kind of two things here. Where are you finding most of your deals? Meaning what source and then further are they mostly made up of resale properties or do you have some new construction properties in your portfolio?
We don’t have any new construction that has been built in the last year to 18 months. All of our properties have been either resales or we went into neighborhoods. And in fact, our Chattanooga portfolio is mostly in an opportunity zone. And we went there specifically for the prices of the houses compared to the rents that we saw coming outta that area. We knew that these houses are gonna take some work, but we can turn it around. And like I said, we have turned that around. It’s it’s hugely profitable for us, but when it comes to finding the deals, I don’t look so much more@realtor.com or the MLS. What I’m doing now is tapping into my network, other investors and talking to them like, what do you know about this area? What are you thinking about it? Is there anything that I should know about it?
I’m gonna go drive that area on Saturday. Tell me where I should look. And that’s where the deals are now starting to percolate from it. You know, much like anything, the more you do it, the more it comes to you, you know, the harder you work, the luckier you get is what they used to say. Now I just have deals coming to me all the time. And for the most part, I’m turning them away. Cuz I have a very particular goal in mind of where I want to be and what I want to do. And I have a, a client and he’s almost a mentor to me when it comes to real estate investing. And this man is tremendous. Could not read until he was 30. Wow. He is now 53 years old. He has 40 million of real estate under his management. And he’s only 13% leveraged.
That’s incredible. Wow, good for him.
Yeah, he did it all himself. And he has kind of said, Hey, look at this area, look at that area. I’m thinking of building over here. Do you want to join? And we’re like, yeah, we’d like to get in involved in that. And so he’s part of my network. Now, if I have a question, I just can’t figure out the answer. He is like, well, let’s look at it this way. So even I who practice this for a living, have questions and by asking somebody else who knows something about real estate, I’m learning something as well. We all don’t know the answer to everything. And from asking those questions, I’m getting deals of from everybody from my real estate agent, from, you know, clients from my, you know, insurance agent, I learn from everybody and everybody kind of has a little bit more to offer and sometimes they’re deals. They, they have deals to offer mm-hmm <affirmative>. So I would say to people, let your network work for you, let your team work for you. That’s where your best deals will come from.
Yeah. There’s a lot of power in your network. And you know, the old saying is your net worth is equal to your network. That there’s a lot of truth in that. I don’t know where I heard this before, but I think you either wrote about or talked about five things to do before you start investing in real estate. If I’m correct on that, I’m gonna throw that question out at you. You know, what are the five things to do before investing in real estate?
Yeah. I, I did write a, a short article on that and in no particular order, you know, if I remember this correctly, it’s one get your financial house in order. That’s the most important thing. Yeah. You can’t have deemed up credit. You, you can’t have judgments against you. You can’t have liabilities. You can’t have wasteful spending just going everywhere. You really gotta get your, your financial house in order. And that’s the first thing. The second thing is you need to put a team together before you do anything. You need to get your team together because you need to be able to sit on, go and pull that trigger whenever you want. So first is get your financial house in order. Second is get your team together. The third thing I would say is figure out what you want. Do you want commercial? Do you want residential?
Do you want short term? Do you want long term? You want multifamily? You want single family figure out where your space is. I’ve got clients that like self storage, you know, and that’s, that’s neither of what we just talked about. It’s kind of like you build a corrugated steel buildings and you put it in a kiosk and it just kind of sets itself in every 30 days. If it not paid, you go padlock. It that’s very different than single family where you can’t just padlock somebody’s house. So learn about the area you want to invest in. For me, I like short term. I like long term. I like multifamily. I like single family. So I’m little bit of a mix. So get your financial house in order, get your team together and figure out what you want. Then I would say, you need to set up a structure to protect yourself.
You really do. I like LLCs. I like Wyoming for LLCs. I like Nevada for LLCs. I like Tennessee for LLCs. And there, there are different reasons for each of those states, but talk to a lawyer and get your structure together. You need to protect your assets. You really do. And you don’t want any personal liability associated with these purchases. So the fourth thing you do is you set up a structure to invest through, and that can be a series, LLC. It can be a single member LLC, or it can be multiple LLCs. It doesn’t really matter. Talk to an attorney that knows what they’re talking about to do that. And then the fifth thing you need to do is you need to talk to a bank and you need to get approved and you need to figure out what does the financing look like? Is it a five 20? Is it a 5 25? Is it a cross collateralized loan for 25 years? Is it a conventional loan? You need to understand the numbers and how that all works together to make you profitable. So those are the five things I would say you need to do before you get started in real estate investing do these things first. And then once you have all those things in place, you’re sitting on go ready to pull the trigger on a deal.
Yeah. Good advice. The one thing I’ll comment on is this. I heard investors over the years, too many investors, Ashley come to me and say, Hey, I haven’t pulled the trigger on a property yet because I’m still trying to get my legal structure or my LLC set up and I’m thinking to them, well, why are you spending so much time trying to figure out how to set up your legal structure and where to set up an LLC and all that stuff. When it comes to asset protection, when you don’t even have an asset to protect yet, let’s start with the piece of real estate, make your first investment or your second investment. And then you can get an LLC set up. Ideally in that state, you transfer the title, you get all that stuff set up or an attorney can help you do that. You know, it’s kind of a form of procrastination. They basically get stuck in a rut that they don’t pull themselves out of because they think that they need to put everything in place first. And I’m just saying, look, you’re putting the carriage in front of the horse. You got it backwards. Let’s get the carriage and then we’ll put the horse in front of it.
I agree with that. You can find a property and set up an LLC within a day. It doesn’t take long at all. Honestly, when I set an LLC up for a client, it’s a, it’s a loss leader, honestly, you know, I can set ’em up so fast, you know, from start to finish. I think we’re looking at under two hours and that’s what I’m in Nashville. So we can just run right down to the secretary of state’s office and get everything filed. And it’s done. And suddenly you have this structure and get you a tax ID. I can register with the department of revenue here in the state and you’re off to the races. All you need to do is go to the bank and set up an account you’re done. And you have your legal structure, you know, ready to go before you close mm-hmm <affirmative>.
So I, I think your, your point is, is valid that you don’t have to set up the LLC first, go ahead, make that offer. And you can even quit claim it at closing into the LLC. It it’s real fast, but I, I would say don’t have that asset in your name. Definitely get a legal structure around it. Yeah. And protect it because you do need to protect yourself. You need to protect your retirement. You need to protect your home. You need to protect your family. Yeah. So be smart and have a structure in place before you go to closing, but you don’t have to do it prior to making an offer on.
Anything. Yeah. Do you have any other comments about, you know, preparation? I mean, you’ve talked about legal structures and protection, but when it comes to real estate taxes, is there anything that investors should know about in terms of the tax side of the equation? When it comes to preparing and protecting their investments?
I listen to tax podcasts all the time and it is so dorky, but I love the tax side of it. And what I would tell people that are tax layman, they don’t understand the taxes. It’s that when you create an investment like this, you’re creating a business. And so you’re going to get all these deductions and I can tell you all the code sections off the top of my head that I think about, I think about section 162, which is business deductions. I think about section 163, which is business interest deductions. So the, the interest on your loan is deductible learn about that. Understand how deductible it is. And to what extent, section 179, the depreciation schedules learn about section 179 and, and how you depreciate things learn about cost. Segregation studies learn about section 469, the passive investment rules. Those are terribly important. Section 169 of the tax code talks about passive investment rules.
And there’s this little tweak in there that makes short term rentals different than everything else. And to understand how that works is fascinating, but I kind of geek out on it because I’ve got a tax background. I’m like, ah, look at what we could do here. So I would tell people, learn these basic code sections. They will help you. You don’t have to be an expert on them, but you do need to be familiar with them. Just like tax code, section one, defines income. And what is income? Just know the basics, let your accountant do the rest, but have the ability to have a conversation, understand how you’re going to depreciate an asset. For example, regular real estate. Residential is depreciable over 27 and a half years. But if you do a cross segregation study, you can take the bulk of that in five to seven years, commercial real estate is depreciable over 39 years.
If that’s a straight line depreciation, but again, you can shrink that and you can compress that depreciation and you, you can take it a lot faster, which makes you so much more profitable at the end of the year, understand these small things within the tax world, as it relates to real estate, and it will help you out tremendously. It’s one of the struggles my wife has had with me because I think in terms of tax all the time, you know, we can’t buy it that way. We need to buy it this way. We need to buy that instead of that. And she doesn’t understand why I’m like, well, if we buy a car, I can’t depreciate that car because it’s not over seven or 6,000 pounds, but I can buy that pickup truck and depreciate that pickup truck suddenly she’s starting to get why I do things the way I do.
I’m not driving the Porsche. I’m driving the F-150 and she understands, oh well it’s deductible. And you can depreciate it in one year, if you want to, because of the 6,000 pound rule. So it’s things like that, that people who are invested in real estate start to understand, and they start changing their lifestyles to, you know, fit within the real estate and investing, you know, lines. If you’re driving down the road, you wanna stay between the lines. I want everybody to stay between the lines, but Hey, you can do a lot between these lines. You really can, and it can benefit you.
Do you talk about much of that in your book? The sections.
I do talk about, yeah, there is a whole section on tax deductions and things that people miss all the time and you need to go over these things. You know, years ago in my law practice, I used to send out an end of the year letter around November saying, Hey, end of year is coming up. Have you done these things? Have you looked at these things, these are all deductible to you. Let’s make sure you get these. And you know, I put that same theory into this book saying, Hey, you need to understand this. This is deductible to you. A lot of people miss it, like property management fees. Those are deductible to you. I use a software called Buildium and that’s deductible to us, my subscription to bigger pockets. That’s deductible to us, my subscription to, you know, anything else is deductible. And once people start thinking that way, the profitability of their investment goes up so much because those are business deductions, you’re running a business and it’s just those small little nuances. Sure. And I, I tried to throw ’em into the book as well. Like, Hey, you need to understand this mm-hmm <affirmative>, this is important to you. This is important to your bottom line. So yes, there’s a whole chapter on it.
Okay, cool. So let’s just start to wind things down here. A couple questions. How do you know when is the best time to sell a property? And I would also make the argument that there’s probably never a time to sell your property <laugh> but just curious your thoughts on that.
So I tend to have your long view on real estate investing as well. If they’re making money for me, why would I sell them? And, and we sold a property. We sold two properties in 2021, and we made a really good profit on it. But the reason we sold it was we wanted to move into short-term rental. And those were long-term rentals. They were multi-family. We were all in on those properties, 400, $15,000. It was a, it was a duplex and a quadplex. We sold for 7 65, 2 years later. And then we bought a short-term rental in Montana. And that was just a business shift for us. We wanted to have more short-term rentals under our belt. So now we have three and we still have 15 long-term rentals. So our mixture is pretty good. Also, we like to go to Montana.
I, we do a lot of fly fishing together, my wife and I enjoy that. It’s a place where we can unwind so we can actually use the property. I’ve actually never been to the properties in Gatlinburg. I don’t know what they look like or, or anything about ’em, but for us it was a shift. The only other reason I would say is if selling would allow you to scale up, that’s really important. I understand that, you know, you don’t wanna tie up all your equity in a property. You wanna keep borrowing from it, but sometimes getting your down payment back will get you over that hump into another deal. And that’s important. But for the most part I’m of your mindset, that if it’s working, let it work, let it continue to work, keep borrowing from it and keep scaling, keep scaling, keep scaling. In fact, you know, we had this Chattanooga portfolio that we took over back in March or April because we found that our property manager was mismanaging the property.
And it took me going there and knocking on every single door meeting with every single tenant asking what can I do to help? How can I fix this? And instead of getting rid of the, the whole portfolio, which we would’ve made a good profit on, we leaned into the problem. And I think as an investor, if you learn to lean into the problem, instead of run from the problem, you’ll get paid back, twofold, threefold, or even fourfold. And that’s what we’ve done. And we’ve been very happy with that payback, but we don’t plan on ever selling this portfolio. It just works too well for us.
Nice. Well, congratulations on that. Cool. So last question, I’m just curious, do you self-manage your properties or do you hire property managers?
We self-manage our Knoxville portfolio in our Chattanooga portfolio. Our short-term rentals have property managers that handle those. We do have one last location that we don’t manage, but the property management fee is so low. It’s like $30 a door that it doesn’t make sense for us to take it over. So I think we’re actually gonna sell that at the end of the month and then scale up into something else. So that’s one reason we’ve had it for about a year now that that area’s exploding and we want to scale up and buy multiple more properties with that. So that’s one reason we’re selling that one.
Nice.
And then we’ll have everything that we have under management ourselves.
Yeah, that’s awesome. Well, Brian, I appreciate you coming on the show. You know, I’m gonna encourage people to pick up your book Replace Your Income: A Lawyer’s Guide to Finding, Funding, and Managing Real Estate Investments. Tell our audience how they can find you follow you and get your book and, and where they can find your law firm.
Absolutely. So you can find the book at it’s on Amazon and it’s at Barnes and Noble. You can also order it through the website, www.briantboyd.com. We have a Facebook page and an Instagram page. So we’re there at those handles as well. As far as the law firm, it is Boyd and Wills. So www.boydwills.com, and you know, we’d love to hear from you. I’d love to help you out. And Marco, thank you again for your time today. I really do appreciate it.
Well, I, I appreciate you taking 40 minutes of your time to you know, chat with me and share your knowledge with our audience. We’ll make sure that this is all transcribed and the, the links are in the show notes. Thank you for your time. I really appreciate you coming on.
Absolutely. Thank you again, sir.
All right. Thanks. Hope you enjoyed today’s interview. Remember to download the free report on our website, the ultimate guide to passive real estate investing. It’s just one click away and it’s a good primer for you. If you’re new to real estate investing or you’re looking to grow and scale your portfolio, remember you could have a free strategy session with our team of investment counselors. They’re there to help you answer your questions, point your compass in the right direction, and maybe make some recommendations on markets that make sense from an investment perspective, as well as turnkey rental properties, both from the resale side of the market, which are newly refurbished, as well as those that are new construction and actually some good news. Our pipeline has actually been growing. We’ve always had a strong pipeline of property coming through, but for some reason over the last month or so, we’ve seen the volume of deals that we have available for purchase increase. So that’s a really good thing, especially after the recent dry spell of low inventory for the last, I don’t know, year or two, remember to subscribe to the show if you haven’t done. So just click the button and subscribe. It only takes you a few seconds, share this show with your friends and family and other like-minded people. And we would greatly appreciate a rating and review on iTunes or wherever you listen to the show. Thanks again for listening. And we will see you all on our next episode.
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