Title: “Adapting to Change: Anderson Advisors’ Ongoing Evolution in Tax and Real Estate”
Episode: 210
In this episode of Profit First for REI, we have Toby Mathis. He is a speaker, author, investor, and one of the founding partners of Anderson Advisers.
Toby talks about the best ways to get the most from your rentals. He also gives breakdowns of processes for different mindsets and team members he had.
How to become an actual real estate investor with the right mindset? Find out on this episode.
Enjoy the show!
Key Takeaways:
[01:10] Introducing Toby Mathis
[03:05] Establishing Anderson Partners
[10:37] The hard part of scaling up
[15:15] Why do investors live deal to deal?
[24:24] Maximizing your properties
[30:18] Toby’s advice for first-time real estate investors
[31:49] Connect with Toby Mathis
Quotes:
[13:04] “You have to have a good team, it is non-negotiable.”
[18:00] “You might want to buy things that are highly profitable, generating income, and use that income to continue to buy more assets.”
[30:20] “Don’t own things in your name.”
Connect with Toby:
Website: https://tobymathis.com/
Tired of living deal to deal?
If you are a real estate investor or business owner who is tired of living deal to deal and want to double your profits, head over here to book your no-obligation discovery call with me. Either myself or someone from my team will hop on a short call with you to get clear on your business goals, remove any obstacles holding you back, and map out a game plan to help you finally start keeping more of the money you work so hard to make. – David
Transcript:
Speaker 1 (00:00):
Don’t own things in your name. There you go,
Speaker 2 (00:03):
There you go.
Speaker 1 (00:03):
Make it simple. Use land, trust and LLCs and isolate the risks. So I’ve had three houses burned down. We have hundreds of properties. Had a tree fall right on. Thank God nobody’s been killed, right? Yeah, no kidding. At the same token, you don’t want to lose your portfolio because of one event, so you just don’t own it in your name. From an estate planning standpoint too, don’t own things in your name because if you die, you don’t want to force your kids into a situation where they have to go to court and go through that whole probate or whoever your loved ones are, and maybe it’s organizations, maybe it’s family members, but make sure that you’re keeping things isolated in out of your name.
Speaker 3 (00:42):
If you’re a real estate investor who’s sick and tired of living deal to deal, then welcome home. Hear from everyday real estate investors just like you, and discover how they’ve completely transformed their business by taking a profit First approach. This is the profit first for REI podcast, where we believe revenue is vanity. Profit is sanity. It’s time to start making profit a habit in your business. So here’s your host, David Richter.
Speaker 2 (01:09):
We have the one and only Toby Mathis on the Profit First. Rre I podcast today. He’s the founder, one of the founders of Anderson Advisors. He’s a very down to earth guy. In this podcast, he talks about some of the best ways to get the most from your rentals, how to become an actual real estate investor and what the mindset is. And if you’re from zero to 1 million, from a million to 10 million, he gives certain breakdowns and processes for the different mindset and the different team members that he had. It was, I cannot wait for you to listen to this episode, get that information. Then he ends with just a very practical step to be able to protect yourself. So if you’re doing this thing that he talks about and you go through that process and you’re like, oh shoot, I’m doing that right now, he could probably save your behind just with that one practical step, thank you for being a listener and enjoy this episode and get all the value you can out of it.
(02:00):
Hey, welcome back to the Profit first RI podcast. I’m your host, David Richter. I’m super excited about today have Toby Mathis, who is the CEO of Anderson Advisors, which you might be using them. You might’ve heard of them. They are, they’re incredible. They do a lot of great things, estate planning, tax planning, everything you need to make sure you’re keeping more of what you’re making too. So we handle the cashflow side, but they handle making sure you don’t lose your shirt and that you’ve got more money in your pocket. So Toby, super excited to have you on the podcast today.
Speaker 1 (02:29):
Hey David, excited to be here. One quick correction, I’m just one of the founding partners. I have a CEO because I don’t want to do all that work.
Speaker 2 (02:37):
Nice. So even better. He’s the founder and he’s one of the top dogs there at Anderson Advisor. Honestly, I’ve had great interaction with Toby. He really caress. He knows a lot about the real estate investing community too, like the marketplace. He’s got some cool things to share today. So excited to dive into that with you, but since you’re one of the founding partners, let’s dive into that. What made you even establish Anderson advisors and go down this road?
Speaker 1 (03:04):
It was back in the nineties, so if anybody wants to go for a little future trip, it was when trading came out where you could actually start trading your own account. Sounds really weird when we talk about stocks, people don’t realize that there wasn’t always a Robinhood, there wasn’t always Schwab, there wasn’t always TD Ameritrade. You used to have to go to a broker and a hundred bucks to enter a trade and a hundred bucks to get out of it and it was painful and you couldn’t just trade quickly. You had to call somebody and then they had to call somebody. They used pagers back then when a stock moved and you would actually look at the New York Times to kind of do your picks. So as things as technology took over, there was a lot of issues from a tax compliance. They’re treated horribly by the way, like stock market investors can get, if you’re treating it as a business, you can’t write off your expenses.
(03:56):
So unless you meet this thing called a trader status, which is facts and circumstances, IE, you get to be audited and go to court and try to articulate why you should be treated as a business and decisions are all over the place. But that’s where we started back in those days. Real estate investing is something that the founding partner, Clint Coons and I, we’ve been investing a little over. I think we’re either over just around 400 unique properties. We have apartment buildings, single family residences all over the place, commercial buildings, manufactured housing, mobile home parks, you name it. We probably own a part of it in our portfolio just because we’re complete real estate addicts and we can’t help ourselves. But we deal in that realm too. And what our firm does is really, it’s three things. It’s preserve, protect, and prosper. It’s been our mission and we take it really seriously.
(04:53):
We want to help you preserve your assets, protect it from lawyers, snoop’s Uncle Sam and pass it on in the right way. So we do a lot of work with real estate investors all over the country. So we’re 500 of us at our firm that are CPAs, EAs, bookkeepers, admin and attorneys, and we all work together to make sure our clients keep the fruits of their labors and don’t needlessly give it away and also don’t put a big old bullseye on your back. As you’re probably aware, in real estate investing there’s a degree of risk.
Speaker 2 (05:24):
Oh yeah, a hundred percent. That’s fascinating. So what it started out more like a modern day, Charles Schwab or that’s how it started From what I was hearing you say, it
Speaker 1 (05:37):
Was the compliance. The compliance we did, they’ll put it in a nutshell, if you or I decided we wanted to be a plumber and we went and we got some low cut Levis and some tools, and I say that with Jes, right? You could go out and you could start operating as a business and write everything off under the sun that’s related to your business. That’s helping you make profit in the world of investors, they don’t let you write anything off. And so people started filing as something called trader status and as the technology increased and people could trade faster and more and more people that were not brokers started entering the market, they realized it was unfair that they could actually have an office they couldn’t even deduct. They could have expenses like computers and equipment and subscriptions, go to trade shows, go to conventions, go to workshops, couldn’t write any of it off, and so they started doing this thing called trader status where they would write on their return, I’m a trader, it’s not in the code.
(06:37):
So they would just say, Hey, I’m going to write off my expenses on Schedule C and I’m going to show my income on Schedule D, sorry to get techno speak on you, but they would just get this lightning audit at ’em. There was a workaround and it still exists today, which is basically operating like a family office where you set up a corporation or an LLC tax as a corporation to act as your main management company and that’s where your family members may sit on the board. You may sit there as a family and say, this is going to be our operating entity. A lot of people have heard the term family offices, this is kind what they do, and then you have your investments in sub LLCs that are usually taxed as partnerships. So in the case of a trading account, you may put it in an LLC that’s owned 80% you and 20% to your corporation.
(07:26):
You may even agree to pay your corporation a monthly amount and magically I can write that stuff off. I don’t even have to worry about writing off the 20% that goes to the corp because it earned it because it’s getting that profit interest and then it uses it and writes off all the expenses that are associated with running the enterprise and it just works really, really well. It’s so much simpler, but that’s where we came from and so we were constantly working with people that were really working in the stock market, trying to keep them from being audited, trying to take away that uncertainty and putting ’em in a structure that mostly affluent, this is how they do it. If you heard the term family office, and I know you have because you probably work for a bunch of family offices with your fractional CFO work and people should be treating themselves like that. We were doing that again back in the nineties, early two thousands, and we were kind of ahead of the curve and as a result you fast forward whatever it is, 25 years, 24 years, and you have quite the enterprise and you have quite the clientele and you learn a lot from them and they learn a lot from us and it works really, really, really great. It’s a fun business to be in.
Speaker 2 (08:38):
So let’s talk about that journey. When you started, you probably didn’t have 500 team members and thousands of clients, so what was that journey like going from when you started to what it is today?
Speaker 1 (08:49):
Yeah, scaling up is always the issue. I kind of look at it like tranches, right? I think of it as if you’re under a million in revenue per year, you can operate pretty much shoestring. You can probably get by with spreadsheets and things like that. You get between 1,000,010 million and you need a totally, it’s another skillset. You got to start working out of the business and you start working on the business and you’re starting to behave differently. You get up to the a hundred million and it’s another ball game altogether and then probably a hundred million to a billion, you better make sure you have a really good board and you better make sure you have really good executives so you can get by with a lot of not the greatest team members as you’re growing and then you realize that you’re hitting a ceiling because of it and you have to shift your thinking and they’re very, very different approaches. To me, those are all different businesses and some people are really good at that zero to million growing it, handing it off to somebody else or maybe you’re really good at that larger business and you know how to pick good executives. It was like, I think it was old Henry Ford that said, I don’t have to be the smartest person in the room, I just need to be surrounded by the smartest people in the room. You just got to have good team members and it’s completely different skillset.
Speaker 2 (10:09):
Yeah, so that’s very interesting. So then on that journey, you went from probably the zero to a million, one to 10 or maybe 10 to a hundred, would you say the hardest part of scaling up is finding those people along the way? Like you said at the beginning, doesn’t have to be the rock stars, but as you get bigger it definitely matters a whole lot more and that’s the thing that I kept hearing. So would you say it’s a warning how to hire those right people that takes you to the different levels?
Speaker 1 (10:37):
Yeah, I would say that that’s definitely last year we did a transaction with private equity and we did a roll up into a global entity where we have a whole bunch of sister companies now and you realize all they care about are KPIs, which I’m sure that’s probably your language.
(10:56):
You have to be able to monitor how everything’s doing. The way I look at it is if you’re getting to a car, you want to have a dashboard that tells you the health of the car and if there’s a warning light comes on, then you’ll go focus on that area. A lot of people don’t have a dashboard and they don’t have warning lights. And I’d say the biggest difference between a company that’s zero to a million in a company that’s a hundred million and above is warning lights and the ability to, and then having the right technicians to make sure the vehicle never has issues. You try to get to the issue before the warning light goes off. In other words, you want to have these failsafe redundancies of is there going to be an issue? We want to know about it ahead of time.
(11:36):
Here’s all the KPIs we use to make sure that we get out ahead of it so that we never have the warning light show up in the first place. Most small companies even they don’t have any of that. You’re doing it by your intuition, your business, you’ve got your 10 employees, your 20 employees, your 30 employees, whatever it is, everybody by their name, and you have an intuition of whether things are going well in your business until you get embezzled. And then everybody that’s in that size it seems has an embezzlement story where somebody takes advantage of ’em because they realize they don’t have systems. There’s no warning lights, so somebody just does some things they shouldn’t. It’s like it’s a reoccurring story. Everybody’s heard it, right? Everybody knows somebody. If you’re around business owner that’s had that and then they say, oh, I need to be serious about this.
(12:21):
I need to have the bean counters, shouldn’t be the check writer type thing and we need to have checks and balances put in place, and you could do that throughout your entire business and it’s just a matter of scale, zero to a million, it’s probably not worth it to bring those people in. They’re going to cost too much. You’re going to lose all your profit, you’re not going to make any money between 1,000,010 million. You probably are going to need one or two and a really good CEO would really help. Otherwise you’re going to smash that 10 million and it’s going to be like hitting a bouncing back off it. You’re just going to keep hitting it. And I see clients do this all the time. They can’t get out of their own way. They refuse to give up the reins and bring in people to help scale ’em, and then it’s absolutely a necessity when you get over that 10 million to a hundred million range.
(13:04):
You have to have a good team and then once you go over, we just saw WeWork do a spectacular failure. I would say the spectacular failure is because they didn’t have serious management. The folks that I knew in that industry, actually there’s a video with a guy named Frank Coddle on my YouTube channel, go watch it because we predicted this thing years ago. He just said, there’s no way. Nope, not the way they’re running. Nope. Makes zero sense. And they didn’t have serious people and they were ricocheting all over the place. It was very predictable. When you see a company that’s going to fail, same thing’s true is if you operate right and you have good people, chances are you’re going to succeed. And so you can kind of see these things. I know that’s not the topic you necessarily wanted to go into all day, but here I am, I’m a tax attorney, I have really good executives.
(13:54):
I do not do that work right? I do not do CFO work, David, that’s your job, right? You need to do CFO work. You hire someone who’s really good. I don’t go change light bulbs in my units. It’s not a good use of my time. And there’s some people that that’s what they love to do and I’m just saying that’s perfect. You’re going to bounce off the ceiling at a million. You’re never going to get bigger. Or maybe if you’re in San Francisco or New York where everything’s a gajillion dollars, maybe your ceiling is 5 million or 10 million or something like that, but there’s going to come a point where there’s not enough time for you to be able to do everything and as a result, your growth is going to be a throttle.
Speaker 2 (14:34):
Okay, I love this topic. I think it applies to anyone who’s listing it depends on where they are in their journey. They can put themselves in those shoes if they’re zero to 1 million or one to 10. What I keep hearing is you have to put those right people in place. I love what you said too, giving up the reins. They have to be willing to give that up and I see a lot of people that don’t. So this is the PR first RI podcast. Do you see that A lot of people that are real estate investors, why do they live deal to deal? Why are they just spinning their wheels and really not getting anywhere or they’re doing a lot of transactions but they’re really not gaining any ground?
Speaker 1 (15:15):
Yeah, they’re focusing on the wrong things over and over again. So I always equate this to the things that we can all relate to. So think of it like Monopoly and you play Monopoly. You go around that board the first few times, what do you do whenever you land on a property that first time around the board? What do you do?
Speaker 2 (15:34):
Buy it.
Speaker 1 (15:35):
You buy it because I’m buying an asset that’s going to create revenue in the future. We go around the board when we’re young people and we don’t buy anything. We just try to stay out of jail and then pass, go and get 200 bucks.
Speaker 2 (15:50):
Yeah,
Speaker 1 (15:51):
That’s like, hey, until you’re about 24, you’re just like just trying not to do damage. But what we should be doing is buying assets. If you focused on assets, then the pressure would be off because you would’ve been doing it when you were 16, 17. Some people, when they’re 12, their parents have the foresight to get them involved in their business. They pay ’em something, they put it in a Roth. By the time they’re in college, they have 25, 30,000 bucks sitting in a Roth that’s growing by the time they’re 35, that thing’s hundreds of thousands of dollars and they’re realizing the power of compounding and they learned it just by watching, right? Yeah. Not all of us have folks or anybody that’s doing that for us or they’d realize that power. Until you see it, it’s really tough to understand that that’s where true wealth comes from is buying assets and real estate’s no different. So we will snooker ourselves to think, Hey, I’m going to be a house flipper. That’s how I’m going to make my money. And you don’t realize the house flipping is me working.
(16:52):
What I need to do is take that money and buy assets with it, and assets are things that put money in your account every quarter, every year, every month I can buy groceries with it and continue to buy lots and lots of assets. So you think of it, again, this is monopoly. I need to buy things that are going to pay me. I don’t want to land on things that cost me and real estate could be either. You just have to figure out is it an asset or is it a liability? Here’s an easy test. Is it putting money in your pocket every month? If you use that test, you stay away from deals that are going to cost you money every month hoping that they appreciate or that somehow you’re going to transform the property into something that it’s never going to be like.
(17:31):
We chase these things thinking, oh, real estate’s a great investment. It depends. In 50 years, anything you buy is probably a good investment, but for the first 10 years it could just kick your teeth in. I got this T-shirt bought in Baltimore thought, oh, this would be great. And you get beat up because the city sucks and you’re trying to do all this stuff. You end up those first few years can be pretty aggravating and then you’re okay, right? But you really want to be okay from the get go, which means you want to buy things that are highly profitable, that are generating income, and then you use that income to continue to buy more assets. Chances are if you’re a real estate investor, either you have a specialty or if you just want to have good cashflow properties, you’re probably buying in the Midwest, right?
(18:17):
You’re probably buying North Carolina, Indianapolis, Ohio, Kansas City, Missouri, maybe Idaho. You’re buying places that are not on the coast. You’re not going to Miami. You might get a quick hit here or there and you get lucky, but you could also just have the snot kicked daddy over those places. But if you are a cashflow investor, there’s very particular markets that you want to be in, and that’s what I’ve seen. The most successful people figure that out. And they do it in the stock market too. They buy dividend producing companies that they can write calls on, and they do covered calls and they make income constantly. The income never stops. It’s just always shooting out. It’s Warren Buffet 1 0 1, he buys Coca-Cola in the eighties and everybody’s making fun of him. And then you realize 20 years later, shoot, the dividends alone are monstrous. He buys Apple and everybody’s like, oh, apple went up.
(19:12):
That’s why he’s so rich. No, he gets like 700 million a year off of dividends at Apple. There’s just so much cash that’s being generated. Go look at Berkshire Hathaway right now. They probably made more money on interest last year than on anything else. They just have money that is constantly making more money. And I think that’s the big difference if you really want to be successful, is figuring that one out. I’m going to buy assets, I’m going to avoid liabilities, and I’m going to keep filling myself up with assets, even if they’re little a hundred dollars assets. It doesn’t have to be, I’m trying to shoot for the stars, but I’m buying things that are putting money in my pocket month after month, year after year, and magically you become really, really wealthy.
Speaker 2 (19:56):
Yeah. Well, that’s great. I love hearing that and I love hearing that from you where you’ve been in the real estate world, you’ve seen the other side and seen the backend and okay, why do people go down? Or like you said, embezzlement or they don’t have the KPIs or they don’t have this in place, and I love how you just put on the bottom shelf, why am I buying the assets that put money in my pocket? If you do, you’re going to beat out most market investors like that. Just like you said, the flippers, the one-off hit who go off and get it, but then don’t actually build the wealth there. So I think that’s great because then a lot more real estate investors would be actual investors and having those properties that they hold for a long time that put money in their pocket.
Speaker 1 (20:36):
David, during 2008, nine and 10, here in Vegas where I live, the value of the property dropped by about 75%, and I was involved in hundreds of flips. I had a neighbor that did over 500 flips, and his average return on a flip was 15%, took him 90 days and he was buying ’em at auction. He was doing all that. And I look at him and now he’s still playing the real estate game. He’s still trying to do the same thing, but guess what? He makes decent money because he has an expertise. But if he had just kept 50 of those properties,
(21:13):
I accidentally kept some of my flips because the roof caved in on one Thanksgiving year. It was it storming and we had just put in new floors and it was like, oh, we’re not going to sell that one. It’s going to cost too much, so we’re going to keep it. Nothing’s tripled in value and it’s paid me more in rent since that time that I, it’s paid for itself now. I just look at it going, well, shoot, it’s just a cashflow machine pays me 1300 bucks net every month, month after month. Thank God I didn’t sell it. So I’m looking at him and I’m always thinking, you would’ve been so much better off if you hadn’t sold all those properties. You should have kept some, right? And I don’t know anybody who flips, who doesn’t say, dang, dang, I should kept,
Speaker 2 (22:00):
Oh man, I love that. There’s the tale of two investors right there. I mean, if you’re listening to this and you’re like, okay, which road should I go down or should I transfer some of these profits into long-term assets? It’s like, here’s living Toby’s lived through 2008, nine and it’s still investing in real estate and still has some of those assets. I love how you said that too. Accidental rentals from some of those ones, and then it’s like didn’t mean to
Speaker 1 (22:24):
Keep them, didn’t mean to keep them. I thought I was going to sell ’em and make some money, but it would’ve made money. But it’s just working. You don’t get rich working. You get rich taking the money that you make when you’re working. So I’m not saying don’t flip. What I’m saying is take the money that you make when you flip and buy assets, and if you just did it, simple rule of thumb, here’s a silly one, right? Hey, for every four that I flip, I’m going to keep one. And that was your goal and you did it long enough, you’re going to be really, really wealthy. There was a realtor that I knew in Seattle, and he would always say, you should be buying a house a year. If you’re selling real estate, you should own real estate. And I still remember it was like 1988, I was really young and here’s this guy and he’s got hundreds of properties. I remember his spreadsheet was like dot matrix. It was all these properties in Seattle and Denver, and I was like, boy, he’s rich. And all I could think of is what’s the value of those? He didn’t care.
(23:24):
He was like, I don’t care. I don’t care what the value is. And what he cared about was the rents that came in nice. He was like, because it’s just going to keep compounding itself. It took me about 15 years from that meeting before I figured it out and I was like, holy crap. He had ATM machines. Each one of those things was an ATM machine just spitting cash out. Why would I sell the ATM machine that’s spitting cash out, so I should be investing in the ATM machine that’s just going to keep making cash so I can flip, but I should be buying the ATM machines.
Speaker 2 (23:55):
Yeah, no, that’s awesome. I love that. This is such great information. I mean, if you’re listed to this, he’s giving you a masterclass of playing the long game in the real estate world and how to survive markets and how to make sure you stay in for a long time and you get what you want from it. Now, one thing we had talked about before that you said you could talk on is how to squeeze the most out without hurting your tenants. And since we’re on the topic of long-term investments, you want to talk about that squeezing the most from your properties?
Speaker 1 (24:23):
Yeah. I’ll give you guys something that I found, and I’ll give you a real life example too. So I buy properties all over the place. I’ve been buying properties in Indianapolis for a long, long time, and I have some crappy properties, some properties that I probably shouldn’t have bought, and sometimes I donate them. I have a related charity that does affordable housing and things like that. So I donated a house and I was like, ah, what am I going to do with this thing? It’s the annoying property. It’s like my worst property. It’s always every year I get to do a turn and it would cost me two or three grand to fix it up again so I could rent it. I think I was renting it for like seven 50. It was hard to get families in the neighborhood. It was a very busy neighborhood and things like that.
(25:05):
So I did something different with it. I did something called a pad split with it. Have you ever heard of pad split? Great company, by the way, but they basically rent rooms. It’s like Airbnb for long-term rentals. You’re a month at a minimum, and then it goes weekly. So I convert this property, it costs me about 20 grand to convert it. And just to give you an idea, I think I bought this property for less than 30,000 bucks. So I converted it, I put furniture in it, and I made it into a pad split. Atticus LeBlanc is the CEO over there, a really great guy too. You should get him on your show sometime. He’s really, really bright. But just think boarding houses, Europe, they’re all over the place. United States for some reason, we don’t embrace it, even though we have probably we’re 7 million units behind as far as housing, and there’s no affordable housing as a result. So here’s an interesting way to fix that. So I took this house, made it into a three bedroom, one bath, and rented them out. I actually added, I took the living room and made it into a bedroom so that we didn’t have as many common spaces. So I ended up with four. I am getting right now, $225 per week on each of those, and they’re almost always full,
(26:18):
Which means I’m getting about a thousand bucks. If you can do the math, you’re getting about a thousand bucks a week. Let’s just say one of them’s vacant all the time, which is not true. The average tenancy with pad splits, it’s just about two years, but I’m making way more. I’m making what I used to make in a month in a week,
(26:37):
And I’m servicing people that are so excited to get to live in a house. This isn’t like, oh, crappy crap box. No, they don’t have utilities. They don’t have these huge deposits that they have to do. People are always worried, well, what kind of folks? I’m getting people that want to work in that busy area, and it’s really expensive to get an apartment and nobody really wants to be in the house down there because that’s not where you’re going to raise your family. So what it did is it artificially drove down the cost of housing like a house, but when you broke it into its components and says, how about a room, a secure room, and a nice house, fix it. It’s already got bed in it. Don’t, all you got to do is bring your sheets. And it was easy. It’s been full ever since.
(27:24):
And so my net operating income’s way up 200%, 300%, whatever it is. It’s funny. I look at it, well, I have a client that did that with a thousand units. Whoa. And so I know the numbers over 200% increase. Wow. For years. I have a builder that I work with and he builds a seven bedroom, seven bath down in Houston because everything went there. I have a huge portfolio in Houston, and it’s tripled in value in the last five years. It’s just gone bonkers. Some of these places, and I’m just looking at it going, all right, it’s really tough to find affordable housing. Well, here’s affordable housing. You can live in a nice house. You could build a house that’s specifically almost like an apartment building, but in a house in a nice neighborhood, and it’s, oh, they’re just great. And so I look at people going, why the heck aren’t you doing that?
(28:14):
Or the other one is manufactured housing cost 200 bucks to build a stick bill right now. So trying to build a 1500 square foot home, you’re probably talking about just to build it 300 grand. How are you going to make money as a landlord doing that? Oh, just I’ll rent it to a new family and hire rents and all that stuff. It doesn’t work, right? It might work for five years and then all the deferred maintenance comes and kicks your butt. So maybe you do manufactured homes. I can get a manufactured house instead of 300,000. It’s going to cost me about 80 grand with a little deck and get it dressed. And so now all of a sudden, I can probably put two or three of those on a property. I have one where I put 30 and it’s for veterans only. We call it Warrior Park.
(29:02):
Nice. We just had bought the little empty park. It’s just the little pads, if you know mobile home parks or manufactured housing. And it just took me a while to fill it up because there was such a backlog on these things. But you end up buying these manufactured homes and it was less than a hundred thousand dollars per unit, and they rent for 1500 to 2000 a month. Well, that’s called cashflow. That’s called, it’s really tough to lose money when you do that. And these are brand new units. So it’s, it’s just using some common sense and not doing what everybody else is doing.
Speaker 2 (29:33):
That’s great info. Like I said, if you’re listening to this, this is a masterclass. Number one, he was teaching you how to play the long term game and then also here with pad split, how to maximize the dollars that are coming in and maximize your property. And I love that you’re doing it. You’ve seen so many different, you’ve seen the different cycles. You’ve had the different types of rentals, you’ve had the accidental rentals, and now you’re open to this new newer concept, new-ish concept with a pad split and then taking advantage of that. So this has been awesome. We’re going to have to have you back to dive into more, but what’s the one last question here? Just the last minute advice, because you work a lot on defending people and making sure that they can keep the money. What’s one of the best ways that they can protect themselves?
Speaker 1 (30:19):
Oh, easy. Don’t own things in your name. There you
Speaker 2 (30:22):
Go. There you go. Make
Speaker 1 (30:23):
It simple. Use land trucks and LLCs and isolate the risks. So I’ve had three houses burned down. We have hundreds of properties. Had a tree fall right on. Thank God nobody’s been killed, right? Yeah,
Speaker 2 (30:36):
No
Speaker 1 (30:36):
Kidding. At the same token, you don’t want to lose your portfolio because of one event, so you just don’t own it in your name. From an estate planning standpoint too, don’t own things in your name because if you die, you don’t want to force your kids into a situation where they have to go to court and go through that whole probate or whoever your loved ones are. Maybe it’s organizations, maybe it’s family members, but make sure that you’re keeping things isolated in out of your name. Do not do that whole, it was so easy for me and my accountant said I could just get insurance. No, unless they’re willing to sign on the dotted line and say they’ll take over the liability. Don’t listen to that garbage. It is garbage. Eventually you’re going to have a liability occurrence, and the last thing you want is somebody to be looking at your entire portfolio going, I could get that
Speaker 2 (31:22):
Right. See, so practical and just like don’t own things in your name, and Anderson can help you. I love working with Anderson. They take care of our clients. They take care of the people in that space. So check them out and we’ll make sure we have the link in the show notes if you want to check out Anderson, but you can search them. Anderson advisors, just tell ’em you heard ’em here on the Profit first. RII podcast. But this has been awesome. Toby’s been incredible here. Do you have any last minute things you wanted to say, Toby?
Speaker 1 (31:49):
Yeah. There’s asset protection, tax planning, and business planning and legacy planning. They all kind of go together. If you’re interested in learning more, you can always go to the website, but just type in Toby Mathis in Google, and you’ll see, I think I have an interview with you, David, that’s sitting there on my YouTube channel absolutely free. You can go in there always just trying to share, because guess what? The pie is really big. There’s no such thing as if I get wealthy, somebody else is losing money. You can create wealth and you create wealth by buying assets and by being a decent person and as a landlord to another landlord, I’m just going to say there needs to be more like us, not these big institutions that are buying everything up where their duty is to their shareholders. We need to actually act like human beings and solving some of this housing issue. The affordable housing will help itself if there’s more people like you and me out there being landlords. So please become one.
Speaker 2 (32:43):
Yeah, no, I love that and I love that Toby, that here has been on this podcast sharing. I mean, he’s one of the founders of Anderson. If you’ve heard of them before, if you’re in the real estate space, I’ve heard them for years and years and just very honored to have him here. And if you are looking for cashflow help and that C ffo help head over to simple cfo.com. And then I love working with Anderson because we work very synergistically because they do the bookkeeping, they do the estate planning, the tax planning, asset protection. It’s like we’re working together to make sure you keep what you make and that you’re not either going in an orange jumpsuit or that you’re not just spending all the money out the door, maybe setting up those KPIs, getting the things in place that real business owners do. And this is a pair here that we can help get you to where you want to be. Remember to make profit a habit in your business. And then, Toby, thank you so much again for being a great guest here and providing so much value to the audience
Speaker 1 (33:36):
Anytime.
Speaker 3 (33:38):
This episode of The Profit First for REI podcast is over, but there are plenty more where that came from. Are you ready to learn how David and his team can help implement the Profit First system in your business? Schedule a discovery call@simplecfo.com right now. We’ll see you next time on The Profit First for REI podcast with David Richter.
