Be Free RE: Accelerate to Financial Independence through Real Estate: Recent Episodes
John and Tony
Learn to accelerate your life journey to Financial Independence (FI) with Real Estate. Are you interested in learning to make your job optional with Real Estate?
We believe that traditional FIRE is Financial Independence + Real Estate, not retire early.
Learn how to quit your job, enjoy time with family, and gain the independence and entrepreneurship experience you want by tuning in.
Have a specific question? Call in to 412-212-8366 and we can help.
Hosted by Tony Angotti (@412agent) and John. BeFreeRE.com 412-212-8366
Tony has a few different partnerships and businesses. He needs to be answering his phone almost at any minute. Is it really possible to have FI in a situation like this?
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Is it really possible to become FI in 10 years without having a trust fund?
What if you have debt?
What if you don't know rich people to lend you money?
John and Tony talk about a simple path to FI, what that "FI" means, and how it is available for anyone willing to make some sacrifices today for FI tomorrow.
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I know when I was first getting started, there was a lot of mixed advice on LLCs and how to best protect yourself.
ANNOYING CYA DISCLOSURE: WE ARE NOT REAL ESTATE ATTORNEYS AND ALL COMMENTARY IS OPINION AND NOT ADVICE
In this week's episode, we field questions related to how to structure your RE deals.
A quick download on how we feel about LLCs
- If you are doing commercial real-estate, it probably makes sense to use one.
- If you are doing a house-hack, it probably makes sense to skip the LLC and use an umbrella policy instead
- If you are in the middle, ... well you gotta listen to the details!
- Also Tony called a guy renting his place out and got his first deal (that way).
As always please send in your questions to
(412) 212-8366
https://www.instagram.com/befreere/
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Listing in to find out how Tony has built several businesses to take care of his financial needs, all centered around real-estate.
- How he found his partners
- How he left his job
- How he grew his project from partnership to organization
- How he thinks about growing things further and giving opportunity to employees
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With only 3 duplexes under his belt, can John transition into more relaxed and enjoyable lifestyle?
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Tune in to learn some tips on buying your second (or first!) deal.
- How did Tony get into his second real-estate deal?
- Why did he even buy a second deal?
- Learn how Tony only put 10% for an investor loan
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How can you save money for your second real-estate deal?
What kind of mindset is needed to get into your second deal?
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A more quantitative look at Tony's first deal.
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Learn how to think about your first deal by listening to Tony recount the W's and L's from his first purchase.
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UPDATE - sorry folks! The proper audio is on this episode now. -- John
John and Tony talk about John's first foray into real-estate as they progress towards FI
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John and Tony talk about the motivations for FI and how real estate became part of our FI journey
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John and Tony talk about the motivations for FI and how real estate became part of our FI journey
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Right price? Wrong price? How to know if you need to drop price, set price, or make some improvements!
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Listen to some quick advice from Tony and John about how they think about the first deal "scaries"
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How do I improve expenses?
How do I improve rents?
How do I get a better re-appraisal?
TUNE IN
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The 10 things that Tony sees people forgetting to think about...
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An ounce of prevention is worth a pound of cure as they say.
It's hard to get rid of a bad tenant and even harder when Uncle Sam won't let you!
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Its renewal season everybody! Tune in for some of Tony's tips for easy renewals
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Florida-man tenant asks: Is it OK if I do some drywall myself?
Notes and quotes from this episode
- Are you approaching the situation from a place of hardship or strength?
- Doing a BRRRR takes time. Flipping can get you income ASAP.
- Rentals and BRRRR are a get rich slowly strategy.
- Do your twice-annual walkthroughs! Otherwise your tenants might start breeding lizards and fruit flies to feed them.
- Whitemaintenance paint - $32 for 5G https://www.lowes.com/pd/Property-Advantage-Flat-Maintenance-5G-I-E-White-Paint-Actual-Net-Contents-640-fl-oz/50404192
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My Tenant beat my lawyer in court! - A (now) funny saga about the world's most impressive, terrible tenant.
There is a famous quote from Warren Buffet about wanting to hire people that are 3 things.
- Smart
- Hard Working
- Ethical
Today's episode is about what happens when one of your tenants is only Smart and Hardworking.
--
As always please call us with your questions at 412-212-8366. We'll answer them live on the podcast!
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In this week's episode Tony talks John through some of his tenant issues and helps him find ways to easily solve problems... sometimes anyways.
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Tony and John reflect on lesson they know now and wish they had known when getting started in RE
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Two different perspectives on how real estate can accelerate and/or provide you a path to financial independence.
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All cash offers?
No contingencies?
2008 again?
Tony and John talk about the current market
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Am I being ripped off by my contractor? Why does it cost $40/hour? Learn the breakdown on how contractors make money.
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John bought a house for ~140k and managed to mess it up. What an idiot.
Listen in to learn how not to make these mistakes AND more importantly how to recover if you do!
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How can I avoid overpaying for a good property manager? What even makes a good property manager?
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How much is you realtor really making? What is normal? What is fair? How can you work with your agent so that you become their favorite client? Find out in today's episode.
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This is the last part of our multi-part series walking Hernandez from being rent robbed each month to generating WEALTH using real estate.
Today we talk about expenses side of the game. Listen in to answers on the following:
- How to figure out what the utility bills will be on your house?
- How can I plan for big expenses like a new roof? New furnace? New bathroom?
- What's a good budget % for basic repair?
- What's a good % for vacancy rates?
- If the main thing is to keep the main thing the main thing, what is the main thing?
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In another chapter of our multi-part series with Hernandez, Tony answers the questions and concerns that are keeping Hernandez out of purchasing his first home.
Listen in for answers to questions like...
- HOME INSPECTIONS
- Can I trust a home inspector? What will a home inspector actually find and help protect me from?
- How do I vet a home inspector?
- Do I need to go to the house when the home inspector is there?
- CLOSING COSTS
- How can I figure out what all the costs of buying a house are?
- Can I trust a home appraiser? Will they give me a good appraisal?
- REALTOR
- I have a realtor I don't like. What do I do next?
- How do I search the web for a good realtor?
- NEIGHBORHOOD QUALITY
- How I do I find out if a neighborhood is safe?
- How can I tell if neighbors are taking care of their house?
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We are talking about https://www.zillow.com/homedetails/12230-Freeman-Ave-Hawthorne-CA-90250/20350703_zpid/ if you are on a computer!
Listen into this week's episode to find out...
- How to think about a deal and determine if it might be a good fit?
- How can you figure out what market is rent for a neighborhood/property?
- How can I think about appreciation potential for a property?
- How to find a good realtor that will help you get your deal?
- Do I need to buy land? Are condo's and apartments OK?
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We continue our conversation with Hernandez about moving closer on buying his first house hack.
Listen in for answers to questions like...
- I want to start shopping for a house? How do I get a bank to give me the money?
- How long does my bank approval last? What do I do if it expires?!
- Won't shopping for a mortgage hurt my credit score?
- How much should I get pre-approved for?
- What if I am pre-approved for $500k but make an offer for $300k? Won't the seller counter with a higher price once they see I am pre-approved?
- How do I get a loan to fix up the house I am buying?
- Should I do a 15yr mortgage or a 30yr?
- Should I borrow money from my 401k?
- What is the accomplishment of the month.
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This week's episode is one of a multi-part series with Hernandez who is trying to figure out how to make his next house choice be one that helps him achieve financial freedom.
Stay tuned for answers to ...
- How can I house hack in a high cost of living (HCOL) area?
- What is one great strategy to build wealth in a HCOL area?
- How can you be an AirBnb host legally when AirBnb might not be allowed in your neighborhood?
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Sage advice from Tonio Angotti on our new segment FIX IT or FORGET IT
and some good guidance on REIA meetings from Tony, who runs a REIA!
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Are you being efficient in your offer process? Learn how to be with some advice from Obi-wan Angotti
Let us know if you like the new Stay or Go segments or if you miss Florida tenant.
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- Listen in for a breakdown of what a triple net lease is
- When you would be looking for a triple net and why
- Some detail on a 1031 tax exchange
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Audio issues are fixed! Thanks listeneres
Florida tenant asks - I fell asleep on the toilet, can you call the fire department?
When managing your out of state rehabs -- relationships with agents and having someone you trust that can do your walkthroughs is a must!
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Tony asks good questions you should use for your own deal
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Should you tell a prospective tenant about what you found that led to their rejection?
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included in this episode: Groundbreaking life lessons from BE FREE RE to change your life
REMINDER: it is not your job to solve all your tenant's problems
Florida tenant asks, what packing services are included in this lease package?
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This episode is brought to you by supportive spouses. You can be one or find one, or both. Supportive spouses.
Florida tenant asks, bugs or trash. I choose both.
Hear TONY and only TONY answer your question about what to do if a tenant tries to move out, right after they move in.
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Florida tenant asks if you have any deals to save money on chicken overpopulation
What can I do about emotional support animals?
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Florida Tenants says "Oh yeah I forgot to say I moved out. But don't worry I left my cat to keep watch over the place"
In this week's episode, Tony has some ideas for how you can advertise and make better use of your office space during these strange COVID times.
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Florida tenant asks, can I hang in with my wife while you fix things?
Rates are low and prices are high. Is it really even possible to find one of those "good dealz" (Tony term) to get started in real estate? Can I get a crazy good one like I hear about online?
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Florida Tenant Says: Don't worry if the heater is out. I have this toaster and my magazines to keep me warm.
This weeks caller Wale from NY asks: how do I restore my rental property to be marketable after a fire
- For next time: require your tenants to have rental insurance!
- In your lease, you should have a provision for damage due to fire being the tenant's responsibility
- There are disaster restoration specialist companies that can help, but they are expensive. ServPro is an example of one (we are NOT sponsored/recommending them though)
- Once the structural issues are fixed, switched out for a regular contractor.
- Congrats on your no longer rent-controlled apartment!
This week's episode is brought to you by DVD players. Available on eBay for like super cheap! Pick one up for your mountain cabin that doesn't have cable or internet today! https://www.google.com/search?q=google+ebay+dvd+player
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Florida Tenant says: If I ask you come into my house in the middle of the night for no good reason, expect the unexpected!
Today's caller is Guisseppe who asks about his current portfolio that is "small" and at 67% LTV. What is the best way to get to get it from 10 to 100?
- Tony says: larger unit count deals are a fast way to grow your portfolio.
- Tony thinks you need more equity to consider a refinance (he likes 50%). At most you'll get 80% LTV.
- Partnerships/private debt. The best debt you'll find is through your network. You have 10 units done. So you have enough of a track record to offer people an opportunity for 8% on their money.
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Florida tenant asks: Can you come over to kill the spider in my rental?
Quotes and notes from this episode:
- Being over accommodating is NOT the trend you want to set as a landlord.
- Even if your tenant is in jail, you need to serve them 24-hour notice before entering the property.
- When closing a property, prioritize the tasks for the government (for example, die tests) so they don't delay your closing!
- Keep contact info for both prospective tenants that you like but couldn't place in a unit for whatever reason and good tenants that have moved out. Remember to market to them when you have vacancies.
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Edwin writes in about a foreclosure that has plumbing and pest issues. Tony shares some advice, both for laughs and for real.
In other news:
- The mortgage refinance fee mentioned is on HOLD!
- Be sure to ask your mortgage broker if they will pay for some all or some of it!
- The national stay on evictions is NOT yet passed as of this writing.
- If you find a good deal, close it! A bird in the hand is better than 2 in the bush.
We introduce a new segment called Florida tenant, inspired by stories about crazy people in Florida.
Florida tenant says: The dishwasher is leaking water onto the floor, so I've only been running it once a day.
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This week we break from the normal format to walk through a deal of Tony's that will be published in the upcoming BiggerPockets book.
- When does doing the work yourself not make sense?
- Viewing a property for what it is today vs having a vision for what it could be
- How good is this deal?
BONUS TRICK: How to save money on multifamily ceilings.
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In this weeks' episode...
Are considering a commercial loan? Wondering about buying a bigger deal?
Chris is thinking about buying 3 APTs with a storefront underneath and is wondering what he should know beforehand.
Where is the best place to market rentals?
Zillow is planning to charge monthly/weekly for rentals. Taylor wants to know what he can do. We have a bunch of options for you to use and get good quality tenants from.
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House Hacking by the Room? Let's talk about it.
You can make more money by renting out by the room, but with everything real estate ... there is risk and reward. Some advice from both John and Tony who have been in the trenches of house hacks both as landlords and tenants.
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What do you wish you knew before you started house hacking, asks Mustafa?
We also dip into the mailbag to discuss the legalities of raising rent by 8% two years in a row! What to do if this is happening to you as a tenant. How to do something like this if you are a landlord.
Tony discusses how he transitioned a good deal into a great one by finding an opportunity for seller financing
John shares his love for cabinet jacks to make kitchen remodels easier
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LEASE OPTION
- This isn't our specialty, we haven't done it
- Lease option is providing a lease with an option to purchase (during or at end of contract). You need an attorney to help write these contracts.
- (From John) https://www.coachcarson.com/tag/lease-option/ has a bunch of good info for you
OFF MARKET DEALS
- WHAT IS YOUR GOAL? Make sure your off-marketing strategy fits your acquisition strategy
- DONT SCALE FAILURE - Low scale is always best (handwritten notes and driving for dollars), then scale up what is working
- SKIPTRACING = SPAM, but it works for some people
GOOD INCOME BAD CREDIT
- Tony doesn't worry about bad credit scores, he worries about why the score is bad
- If it is lack of history and the person is out of college, that is reasonable
- If it missed payments and delinquencies, that is another matter
- More import than the score is the why behind the score
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SCALING YOUR BUSINESS
- MAKE A PLAYBOOK - Make sure you are building systems/processes and documenting them
- DREAM IT - Pretend to be only available by phone. This will help you think in a company building mindset
- MORE INFO - The book E-Myth by Michael Gerber outlines a lot of what we say
SHOULD MY REALTOR BE MY PROPERTY MANAGER
- Are they experienced? Even personally as self-managing properties?
- Be sure the roles are clearly delineated.
- Pay them by the task to dip your toes into the water.
- It is nice to have 2 opinions on properties (realtor and property manager)
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How is COVID Impacting?
- Tony has had help tenants apply for unemployment and get assistance
- We'll see when forbearance periods hit if the market adjusts. For now, still a seller's market.
- John is interested to see what will happen in student rental markets
Recommendations on Washers and Dryers
- Tony says don't own your W/D
- For 3+ Units, Tony says use a coin-op firm and split the gross
- For 2- Units, Tony says have the tenant own for liability purposes
- John likes topload Washers and Kenmore dryers
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WHERE CAN I BRRRR?
- C class neighborhoods with good comps
- Wherever you can find deals
- Hint: you ain't finding BRRRRs on the MLS
- Hint: your realtor probably is gonna get you (m)any BRRRR deals in this market
I HAVE 40 UNITS AND 17k CASH FLOW, WHAT TO DO NOW?
- Simplify, decomplexify
- Tony would sell half and sleep well without having any debt
- John would consolidate into a single ~30 unit apartment complex
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What does it mean to spam your portfolio? Not sure over here either. Let us know if you have an idea though.
WHERE TO GET/CREATE LEASE TEMPLATES?
- Make sure you get someone local to your market
- A local community college class is a good option
- A local real-estate attorney may have a package of documents you can buy too
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DIY
- If you might create fire, electrocute yourself, handle sewage, or be on your roof (or up high in general); consider a pro
- If working freshwater, make sure your main shutoff valve works first
- Find SOMEONE who has done this before, YouTube will only take you so far
- But the best way to learn is to do it yourself
CONTRACTORS
- INCENTIVES/PENALTIES - Focus on the contract before hiring the contractor
- Ease your contractor into work with a small job
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DO I NEED MY REAL ESTATE LICENSE?
- What is your time worth? Are you going to use your license as an agent?
- Are you making an excuse to not get started to invest in real estate?
1% DEALS
- If there are flippers doing deals in your market, there are deals in your market
- Do something other people won't. Be outside the metro, get off-market deals, do work yourself, etc.
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FINANCING OPTIONS
- Max of 4 properties on a residential conventional loan
- 30 year is best for residential
- Commerical will be a 5 year adjustable rate
REFINANCE RULES OF THUMB
- We don't know any rules of thumb
- Do an IRR calculation
- Use NerdWallet's or Bankrate's Mortgage Breakeven calculators
- https://www.bankrate.com/calculators/mortgages/mortgage-refinance-break-even-calculator.aspx
- Keep the psychological benefit of not having debt in mind
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Document your processes, don't discriminate by accident!
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Use fees to influence tenant behaviors
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Avoid unnecessary improvements (while tenants are in place too!)
Call in your questions to 412-212-8366 or DM us at http://instagram.com/befreere
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EXPENSES
- 50% rule is good -- gross Rents - 50% is your expenses, excluding mortgage costs
- Always budget at least $200/mo
- 5% gross rent for CAPEX
- 5-8% gross rent for Vacancy
- Build a spreadsheet to figure out your CAPEX from scratch. It is worth the time.
CONTRACTORS
- Contractors respond to CASH and INCENTIVES
- Start small and work your way in with them
- If you do your own demo, you will get a better quote
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FLIP vs BUY AND HOLD
- Flipping is job
- Buy and Hold is a long-term investment
- (If successful) flipping = near-term cashflow
- (If successful) buy-and-hold = more wealth
BRRRR
- Easier ways exist
- Need a good deal, good contractor mgmt, and good landlord skills
- Can't find a deal? Find a partner and be the money in exchange for their help
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WHY DO PPL NOT START?
- Real Estate is an investment. There is risk.
- Do your homework, but don't think that analyzing will be a substitue for doing
- Borrow experience from realtor/mentors
MONEY
- You need between 0% and 25% downpayment
- You need $5-8k of reserves
- You will need $2-4k of closing costs
- Highly recommended; 3 months of personal rainy day money
GOOD AREAS
- Tony: Population growth, job growth, good mix of appreciation or cash flow depending on your interests
- John: pick a company and see where they are putting stores/offices
- Details: who is your tenant? what do they want? where do they want to work?
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COVID
- Short-term looks like the government is propping things up. Prices staying the same
- Long-term, very hard to know. Either way, you want cash. To weather a storm or to pounce on an oppty
- Stay healthy!
LAND
- Land is more work, more risk, more reward
- What would this look like if it was a homerun? Utility hookups done/paid for, Architecture review done/paid for, Environment Impact Assessment done/paid for, House ready to go.. THEN you would buy it.
REFINANCING
- Brokers are people you pay to do work for you. So you will pay more upfront in exchange for a better rate.
- To make it easy to price shop, have your docs organized and prepped
- Make it easy for the appraiser to make your house more valuable
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CONTRACTORS
- The best defense is a good offense.
- Have a solid contract with incentives.
- Pick someone you have tried out
TENANTS HAVING NEIGHBOR PROBLEMS?
- Your job isn't to solve ALL their problems
- They are adults
RETAINING GOOD TENANTS
- Give a yearly update to their property
- Give them rent discounts in exchange for lawn care-type services
Send your questions for us to answer at 412-212-8366 or DM us at http://instagram.com/befreere
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