What a 4am Drive on a Saturday teaches us about passive investing [Behind The Scenes]

A few weeks ago I was hit with a really stark reminder of one big reason why I started this company. 

We currently own and manage 2 apartments in our portfolio, they were the first 2 deals I ever bought. 

We bought them for passive income but quickly realized that the work didn’t stop at acquisition, that’s actually when it started. 

One of those assets is in St Louis county which is about 4 hours away from where I’m at in Kansas City. 

We have a great property manager and a great relationship with the contractor doing all the work on that property. But a few weeks ago, we got some alarming bids. 

About 6 units that we’re turning had invoices come in between $6,000 - $8,000 which is way more than we should be paying for turns. I asked them why and was told these units were in especially rough condition and there was a lot of man hours that would be needed to fix the big and little things to stay compliant with codes.

We did video walkthroughs, we had phone calls, and both our trusted property manager and contractor said the same thing…these bids can’t get any cheaper if we want to turn these units right. 

So a few weeks ago on a Saturday morning I decided to make a surprise visit on the property when the manager and contractor would be there. I got in my car at 4 in the morning to get to the property by 8 and saw them both there. 

We walked through each unit with invoices in hand and were immediately able to slash items off the invoices. After a few hours on site we got new invoices, we were able to shave off an average of $4,000 off each invoice. A $24,000 savings. 

In this market adding $24,000 to your bottom line equates to about $340,000 of equity at sale. 

Here are 4 things this tells us about real estate investing…

1 - Owning real estate isn’t passive, but investing in real estate is. Our investors don't ever need to be on site or look at invoices, but owners do.

2 - Remote ownership will never be as profitable as having a presence of either you or your partners being local. 

3 - A Property managers job isn’t to save you money, it’s to run the property. If it makes their jobs easier to make you spend more money they’ll do that, even the good ones. And we really do have a great one.

4 - Remote owners and owners who buy for passive income are the most profitable clients for property managers and contractors. 

If you’re looking at real estate for passive income just remember, buying property is buying a job, if you want to be passive, then there’s a big difference between being an owner and being an investor. 

Hope this was valuable.