all right welcome back to our special

new podcast series The 20-minute

investor where my partner Nathan and I

bring you actionable nuggets and

insights from our real estate investing

Journeys in bite-size 20-minute episodes

I’m Aon Amin my wife and I built a

portfolio of eight cash flowing rentals

across three states while working

full-time and raising a young family and

I’m Nathan a husband father technology

executive who built a portfolio of cash

flowing rentals across two states from

over 2,000 miles away together we

co-founded the remote real estate

Academy where we coach investors on how

to build their own port folios of cash

fling rentals from anywhere in the world

so every week we’re going to pull back

on different topics that some of our

members have maybe asked us or things

that we’re working on that we think

might be useful and like I said we’re

going to keep it to 20 minutes and under

so we can respect everyone’s time

including our own so this past week we

did a bit of polling inside of our

community to try and see what was on

people’s minds you know what was it big

picture strategy stuff was there some

specific part of the investing process

they were stuck on and we got a couple

good responses one of which was a really

kind of highle question that I think

would be fun to spend some time on and

it was about you know am I playing the

game right this was from someone who

already has a portfolio they’ve already

invested across multiple States but you

know they’re hitting the kind of common

Valley of Despair where they’re a few

years into their journey and some stuff

has broken gone wrong on the capex side

there’s been an eviction some of the

pains that are more or less inevitable

when you play the rental game for long

enough but they hurt nonetheless and I

can tell that what he’s looking for is

is some validation that hey is this the

right game even though some of this

stuff really sucks and it’s really

getting him down so Nathan what do you

think what’s the kind of first first

part of answering that

question well the first part first thing

that comes to mind is I think we’ve all

been there and I say that tongue and

cheek but it really is more about I

think it’s part of the journey right I’m

sure someone out there has the perfect

real estate journey and nothing ever

goes wrong or nothing ever went wrong

and all is good but I think more often

than enough for most people that’s maybe

part of the game right the one thing

that I heard or I was told when I

started my journey that I try to keep in

mind every single day when I do anything

related to real estate somebody said

something to me or I heard it somewhere

I can’t remember along the lines of as

long as you’re ready you know mentally

financially um you know process people

Network whatever it is as long as you’re

ready and you know that crap’s going to

hit the fan then you’ll be fine right

that’s something that just stuck to my

mind and I keep in my mind all the time

because there’s always stuff that is

going to happen right and there’s stuff

that happens all the time I’ve had

evictions I’ve had trees fall on my

houses through or one house in this case

but uh you know through after storms and

as long as I think you’re mentally and

financially prepared and you know that

it’s just part of the game then at least

for me

it really just helps get through this

kind of stuff how about

you yeah I think expectations are a very

important part of it and sometimes

there’s a false sense of security

especially when you buy newer properties

in nicer areas with stable tenants that

are renewing their lease year after year

when things don’t go wrong it creates

this sense of security which is well

earned right if you bought a good house

in a good area and you have good t

screening processes and you are a good

landlord then yes it’s less likely for

things to go wrong but it is still 100%

inevitable that you will have CeX events

that you will have a tenant that hits a

hard time you know there could be events

totally outside of their control outside

of your control that really affect what

what happens with your portfolio and if

you’re not expecting that no matter when

right it could occur on day one or it

could occur on year three I I think

that’s something hard to Grapple with

but even if you do expect it this is

where I think it gets tough like even if

you set your expectations hey

something’s going to happen it’s just a

matter when you’re saving money in your

reserve accounts it still sucks no fun

when it happens that’s for sure and Al

like just one anecdote there is that

like in 2023 there was a six-month

period where there was not a single

vacancy not a single Mis rent payment

not a single repair not a single capex

expense on my eight proper portfolio

across three states and I didn’t get any

calls it was like just true felt like

true mailbox money yeah it felt like a

dream right and that’s great we were

still stuffing away reserves and for the

most part I don’t touch those operating

accounts like I don’t draw down on them

monthly for personal expenses so it was

great we were building up this big

cushion then one of our tenants like

went missing for 37 days and that

started a snowball of events over the

winter where there was this like uh I

think it was about week stretch where

six of those eight properties all had

major between1 and $4,000 expenses in a

really short period of time that entire

Reserve allocation was evaporated very

quickly and then it was all of a sudden

our Reserve was backed down and so if

six more things went wrong we were going

to be dipping into our own pocket I

share that because at that point in my

journey I was far enough to know to

expect bad things to happen but you

can’t control when those things happen

all at the same time and you certainly

can’t control how your emotional

reaction is when those things do happen

you can insulate as best as you can but

I totally validate the feeling of

sometimes wondering if you’re feel like

you’re playing the right game when stuff

like that happens in short succession

yeah they couldn’t agree more I think

there’s also which is why I said it the

way I did earlier on but there there’s

really to me at least there’s two parts

to this right there’s the the mental

aspect is being prepared just knowing

that stuff’s going to happen and when it

does it does and of course at the time

or on the moment it’s going to feel uh

very unpleasant and despite how prepared

you are it’s never fun and you got to

absorb that information that news and

you got to deal with it I think the the

other part is the financial aspect right

because I think even if you were

mentally prepared if say you did not

have the financial reserves to cope and

absorb these events you would be in a

very very different situation so that’s

why to me it’s really important to have

both of those aspects you know lined up

and ready so that when things happen

again not going to be fun you’re going

to take time to process and all this

stuff because you’re disappointed upset

you just started seeing your reserves

and your income grow and these

properties are generating cash for you

and it’s all great and then all of a

sudden something happens and that goes

down right because you have to absorb

the event but if you can’t because you

don’t have reserves whether be in kind

of your real estate business or your

personal life very different situation

right so I think it’s really important

to have or to be prepared on kind of

those two fronts mentally and

financially totally and I think as well

when you get a handful of rentals for

example even if they’re in multiple

markets the way I think about it not

from an accounting standpoint but in my

head I think of the aggregation of all

that cash flow is let’s say my Vegas

properties are performing very well but

my Iowa properties had a few problems

recently and I need to do a owner draw

from Vegas to go replenish my Iowa

reserves like I I’ll do stuff like that

and and from that perspective I also

think about like just keeping really

clean books like you know you and I both

fessa and we do our monthly reporting

and we see like okay where do we have

overage like where did we not have to

draw down our reserves or maintenance

and where did we have to dip into it and

I think there’s this like ongoing

reconciliation of just you can cross

collateralize those repair and reserve

allocations a little bit again very

clear like do it in a clean way with

your bookkeeping that’s not going to

compromise those from an asset

protection standpoint that’s one thing

where like getting a critical mass of

like six to eight rentals it can help

because if one has a problems the cash

flow from the others can help back stop

you a bit especially when your reserves

start running dry I don’t know do you

think of it similarly or no exactly the

same and I remember when I started we

might have talked about this last time

on the last episode or two I can’t

remember but precisely for what you just

said one of my goals early on was to get

to a certain number of properties so

that I have that diversification or

drisking kind of aspect of my portfolio

and should something happen to one of my

properties that the others could help

absorb kind of the financial cost and

help address any issues that come up so

100% you get to a point where like you

said you have that critical mass or that

critical number whatever it is where

hopefully you get to a place where you

don’t have to think about contributing

from your own personal funds or assets

to go maintain fix repair your portfolio

definitely and I think to we talk about

in our Academy that when we talk about

cash flow we’re usually referring to

profit and we’re very very EXP explicit

about when we talk about you know oh

$200 a month cash flow that’s not the

rent minus the mortgage that is the rent

minus the mortgage minus an expense

allocation minus capex maintenance

Property Management that’s the net and I

think sometimes people group their cash

flow all into one bucket and just say oh

this is just available money for

whatever and somewhere in between that I

think is is realistic where all those

allocations I mentioned it’s Property

Management maintenance cacks I don’t

have a different bank account for those

but what I do is in my head and on our

tracker like I do chop off a good

percentage of of the actual cash flow I

will not take an owner draw for any more

than what I know is available above and

beyond those allocations so that’s

another topic is the idea of like how

you think of an account for profit but

do you have any similar like system yeah

I was going to say exactly it’s probably

a whole other episode because it’s

probably going to be more than a few

minutes to talk about but for our

portfolio what I’ve the model that I

follow is the profit first model and

while I think technically it might be

one bank account I’m not even sure

actually but I use online Financial or

Tech Systems not that are layered on top

of the bank or the banking

services that will automatically do that

separation so anytime money comes into

the account I have a certain percentage

that goes to profit certain percentage

that goes to expenses certain uh or

reserves certain percentage that goes to

taxes certain percentage that goes to

owner profit I think no I already said I

can’t remember what it’s called but

essentially I have systems in place

through fintech financial technology

services and I use two different ones

for our different llc’s that will do

that automatically for me so I don’t

even have to think about it when money

comes in it is distributed across four

or five different buckets based on

certain percentages so my hands forced

in that sense which I love frankly

because then I I know I have reserves

yeah definitely so I know we’re getting

into more of like cash management but I

think the reason we went down that

rabbit hole a little bit was because

some some of like feeling more secure

and like you understand your accounting

and bookkeeping system is what’s going

to also help you in those moments where

you need that resilience because

sometimes you just can’t see through to

the other side to say okay like how long

is it going to take for this stuff to

replenish how long is it going to take

how well am I insulated against these

big capex events and expenses and just

having like control over your books and

also thinking about how you treat the

profit in your business it solves

multiple problems like one it shows you

that there’s still there is still profit

to be had at some point you just got to

like continue to fine-tune the way your

uh accounting is and then two is that

your reserves will build back whether

immediately or whether it takes six to

eight months you just got to have the

discipline to forecast that stuff out so

one other element of the are you playing

the right game discussion which again

this could be a spin-off episode to but

multiple markets right so you’re in two

markets I’m in three and I know a few of

our members invest in multiple if not

several markets and I want to get you

quick take on like I’ve heard differing

opinions some people have 10 markets

they in some people swear by only having

one market where do you kind of fall on

that spectrum and like do you ever plan

to expand beyond the two that you’re

already in yeah that’s a fantastic topic

and like you said probably another whole

episode

but I’m I’m actually a very simple guy I

I listen to those who are 10 steps ahead

of me and I try to replicate what they

do and when I hear way more seasoned

Real Estate Investors who say they’ve

gone through consolidation and they went

from I was in 10 markets or five markets

down to two or three they’ve done it for

a reason they’ve done it because they

have more experience than I do so I’m

going to do the same so because I hear

these types of things I very

intentionally try to not go too broad

into too many markets that said there is

one aspect to be in multiple markets

let’s say two maybe three I don’t know

what the right number is I don’t

necessarily have an opinion on what that

number is but there’s this aspect of

drisking your portfolio and kind of

diversification if you’re in several

markets because should you be all in in

one market and something happens to that

market the biggest employer leaves just

big stuff could happen then that’s your

entire portfolio that’s that’s at risk

whereas if you’re in several markets and

you’re kind of drisking it in that sense

so I like being in my case I’m in but

you know I don’t know what the magic

number is I would not not ever go into

probably more than three personally

primarily because of the process

overhead of knowing three markets as

well as I know the two that I’m in

having your network the people the

property managers it’s different taxes

different fee structures from your

property managers different preferences

for communicating different realtors

when you want to buy or sell a property

so all of that stuff is just I don’t

want that overhead because I’m trying to

stick to the 20 minutes a day and not

spend more than the 20 minutes on my

real estate and Rental portfolio every

single day and I think that becomes

really hard when you’re dealing with

more people right just by nature of

being in more

markets 100% I I feel very similarly and

I think you called out one thing which

is like drisking or or or diversifying

that to me is the main reason to have

multiple markets not necessarily to like

you can find good deal in a lot of

different places right so if I’m

thinking only along the lines of I want

AED two bath house that’s got this

profile I don’t care what city it’s in I

just wanted to have this type of return

profile in this type of neighborhood you

could probably brought in and find quite

a few deals by casting such a wide net

but like you said you’re going to have

to build teams in each market you’re

going to have oversight and management

and understand you’re going to have to

manage your manager you have to

understand the local regulations

understand all the different

neighborhoods and areas so that you’re

buying a good deal or not I think one

interesting trap that a lot of

longdistance investors fall into and I

have fallen into myself is like when

you’re from California or Washington or

somewhere on the East Coast it’s super

expensive like the Quad Cities which is

in Iowa where I invest when I first saw

that you could get a three bed two bath

house for

$150,000 my jaw dropped and I bought one

and it penciled and it has made good

money for us we got it on cheap loans

it’s working for us but what didn’t

realize is that every local around there

thought that that was you know 20%

higher than it should be but all this

out of state money starts flowing in and

it’s that relativity and our inability

to translate what is actually normal in

a market that can really skew your sense

of what’s normal and so that was another

lesson I learned but I treat my markets

as like I basically couldn’t afford to

invest in Vegas anymore the prices had

run up too far same thing in Washington

I couldn’t afford to invest in

Washington anymore and those were big

growth markets where the values were

going up and then they also Drew back in

2022 and so Iowa it was like Washington

and Nevada were my grow stocks and Iowa

was my dividend stock slow and steady

doesn’t have a bunch of volatility and

it’s not going to like LI or die by

what’s going on in some of the more

growth oriented markets so yeah I think

multiple markets that’s one where you’re

right there’s no perfect number but I do

think like two to three gives you that

di diversification and it’s still

manageable with our kind of 20 minute

investor system 100% so all right we’re

just under the 20 minute Mark but I

think that was a good discussion I’m

excited to share that with the member

who ask about it and I would love if

anybody hears this and has any any

thoughts on the matter reply in the

video or tag one of us on socials I

would’ love to keep the conversation

going so on to the next one thanks man

thank you for making it to the end of

today’s episode as you may know podcasts

are very difficult to grow organically

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