Do linsk site Podcast 251: Replacing Your Income with Real Estate as a DIY Landlord with Eric Drenckhahn

by | dolinsksite.ru

How do you build up an arsenal of relevant landlording knowledge? Through hands-on experience. Eric Drenckhahn is a “DIY landlord” who has managed his mid-sized portfolio for years and who has come across countless maintenance and landlording issues. Join us in picking his experienced mind across a myriad of real estate issues and learn how to become a successful DIY landlord.

Click here to listen on iTunes.

Listen to the Podcast Here

Watch the Podcast Here

Help Us Out!

Help us reach new listeners on iTunes by leaving us a rating and review! It takes just 30 seconds and instructions can be found here. Thanks! We really appreciate it!

This Show Sponsored By

We just waRealtySharesnted to give a shout out to our podcast sponsor on today’s show: RealtyShares. RealtyShares is a crowdfunding platform that allows you to invest in professionally managed properties without leaving your living room!

Learn more by visiting RealtyShares.com/biggerpockets!

Fire Round Sponsor

Freddie Mac LogoCheck out Freddie Mac, the leader of multi-family financing, they make homeownership and rental housing more accessible and affordable.

Get a quote today by visiting: freddiemac.com/smallloan

In This Episode We Cover:

  • How Eric got started investing in real estate
  • Thoughts on buying properties for what they’re worth
  • The reason he waited for 8 years before investing again
  • Why the real estate crash didn’t hurt him
  • Tips for determining your CapEx
  • How to become a DIY maintenance landlord
  • A discussion on DIY vs. hiring it out
  • What you should know about managing properties
  • Instances where doing it yourself goes a long way
  • What’s next for with Eric
  • And SO much more!

Links from the Show

Books Mentioned in this Show

Fire Round Questions

Tweetable Topics:

  • “To make money, you need to have positive cash flow.” (Tweet This!)
  • “Landlord can weed out the simple things.” (Tweet This!)
  • “Managing property is no problem.” (Tweet This!)

Connect with Eric

Eric’s Photos

About Author

Thanks for checking out the Do linsk site Real Estate Investing & Wealth Building Podcast. Hosts Joshua Dorkin & Brandon Turner strive to bring top-notch educational content and interviews to our listeners -- without the non-stop pitch prevalent around the industry. With over 1500,000 listeners per show, the Do linsk site Podcast has become the biggest real estate podcast in the world. But don’t take our word for it. We’re the top-rated and reviewed real estate show on iTunes — check it out, read the reviews on iTunes, and get busy listening and learning!

23 Comments

  1. Rob Cook

    Great Podcast. As much as I enjoy Grant Cardone with the HUGE investment plans and ambitions/approach, it is nice to hear about Eric here, who does Rental Real Estate like I do! Our method is not glamorous, or passive or hands off, and it is not simply investing. It is a BUSINESS. And to the extent a practitioner desires, it can be a full time JOB too. And a Job without a boss or imposed routine/regular schedule. A penny saved is indeed a penny earned, and this is easy to accomplish daily, when you own a lot of rental properties and perform the maintenance and Capex yourself. I had a 7-figure income when I retired from my residential remodeling construction company 20 years ago (Cook Bros.), which I still own passively now. I even have a law degree, but that does not stop me for even a second, from snaking a toilet or crawling into a spider hole of a 85-year-old dirt crawlspace, or whatever other dirty work needs to be done on one of our units. It is FAR easier to do it yourself (DIY), all things considered, than dealing with trades and employees and subcontractors! Money savings aside, it is easier, and usually more efficient to DIY. I actually choose to hire property management whenever it is available, but I also manage over a dozen units myself where I either always have, or where no property manager is available. I even prefer to give my cell phone to ALL of my tenants, including those that have outside management! Why? Because I can discuss the problem with the tenant, directly, and know what the situation is before I load up to drive to the property to fix it. or as, Eric mentioned, talk the tenant thru a diagnosis or repair process and save me the whole trip or defuse an emergency! I also don’t like trusting anyone, essentially, especially tradespeople. The repair men often do not know half what I do, and might erroneously diagnose a problem or planned solution and turn a $20 repair that I could do in 30 minutes, into a $400 replacement job. Or worse – if they are dishonest as well as incompetent! Being a buy and hold landlord, is a business, and a job. Being a flipper is too. Only a Wholesaler modality could be relatively hands off, as to the manual labor aspect.
    Tenants LOVE knowing the landlord cares and is engaged, and have NEVER abused their access to me via my cell#. Plus, I am in the units, seeing all, often and frequently since I do my own repairs and maintenance. I see problems before they get bad, both with the tenants and the properties! Efficient. Competent. Present.
    The more I mature into this game, and hear all the many differing methods and approaches to Rental investing, the more I feel comfortable “buying myself a job” when I acquire a new rental. I get more satisfaction, with less worries and stress and problems, working on my own rentals, than I ever did before I retired at 39. Young investors should seriously consider the possibility of making your full-time job and career, working for yourself, on your own properties. It is not only viable, lucrative and fulfilling, but peaceful. It is truly a lifestyle business career opportunity.
    For those who do not like or enjoy the hands-on aspect of residential rental investing, I wish you luck. You are competing for deals, tenants and financial staying power, with people like Eric and me, who have a HUGE edge and advantage since we get our hands dirty. Think about it, try it. You may find a whole new career and lifestyle awaiting you!

    • Eric D.

      Thank you for listening!!

      As always, it’s great to hear from others who do it like yourself. I could probably afford to hire it all out, but it’s a great way to be involved. It never hurts to know your property.

  2. Adam Britt

    I’m a little over half done with this podcast and I am quite impressed with this man’s drive! My father was always a work horse. This guy may actually have him beat! I do have to say though … this is the exact opposite of what I hope to create in real estate. Watching my father slave away 16+ hour days almost every year of his life to make a living … now he is quite rich, but he is the most miserable man I know. He never knew how to relax as I was growing up, and he is now chained to his stress and work and worry even though semi retired. His example is a great deal of what motivates me to keep RE as passive as is reasonable while not throwing money away stupidly.

    My intro to real estate is to avoid my 9-5. Instead, this hard working man spends years of his life getting up at 6, working a conventional job AND real estate till 10, and crashing in bed just in time to get up and do it again.

    I would rather keep my 9-5 for the rest of my life than work 6-10 through the best years of my life. Taking a trip every month when I’m 90 means nothing to me compared to being able to take a few trips a year in my early 30s (now) when I am physically and mentally able to enjoy it to the fullest.

    I’m certainly not opposed to the work. And I would actually like to quit my job and do REI full time ASAP, because I understand that it grows and can become passive once built. But this podcast is the very opposite of passive. The opposite of my goal. In his words, “Every minute you sit on your butt is a minute you are not making money.” That is true. And his philosophy has really worked well for him. But for me, the reason I want to get a solid 10 properties under my belt is because I want the FREEDOM to sit on my butt tomorrow instead of reporting for work or begging for raises! I want the freedom to sit on my butt for a month at the beach with my wife and not have a care in the world. And like most young people, I want it yesterday. Not when I retire. Perhaps my response is more guilt than anything.

    This podcast is definitely making me think about my own involvement though! I wish I were more DIY handy. Perhaps I can get some handymen from my friends and family to teach me the art. I can build you a computer any day, but a leaky faucet is another monster entirely…

    Kudos to Eric for an absolutely outstanding story in REI. Hard work has paid off in a big way!

    P.S. Do you think you could ask your boss if I could take that 6 figure job you left? In comparison, my high skill, 7-years-of-education-with-3-degrees job is squarely in the low 5 figure range, and nobody ever admires that!

    • Eric D.

      Thank you for listening!!

      It was a lot of work in the beginning. Now much less, most of the time. I had four rental turns in October, plus trying to do a rehab, so it was a but more. I still traveled a bit during that time, and am headed out today for a week.

  3. Don Spafford

    Really great podcast. I agree, if you can save yourself money for doing simple things, why not? I recently had a tenant say their garage door wouldn’t open. There is no automatic opener, just lifts up. I went to check it out and I just pushed on the top and it opened. Found out there was a board above the door that came loose and was hitting the edge just enough to not allow the door to open by lifting. I just put in a few screws and it is fine now. Had a property manager got that call they would have sent out a garage door company and probably charged a couple hundred for the time and may have possibly done something dumb to get the door open rather than just pushing on the top. Either way I saved a bunch of money by just checking it myself. I always check things myself first, if I can’t get it or see that it will be a difficult situation, then I call a professional.

    • Eric D.

      Thank you for listening!!

      That is exactly the problem. For many things, replacement is cheaper than fixing, but hat assume you are hiring out the fix. I have done many fixes that would not be worth it. Two hours of my time saves over $100 on a service call.

  4. Mindy Jensen

    I have wanted to get Eric on the podcast ever since I first met him and heard his story. I love love love his story, his work ethic, his “I can just do this myself” attitude.

    I’m so excited we finally got this all worked out!

  5. john a.

    Great podcast! I share Eric’s philosophy of being a hands on investor/property manager. One of the things that attracted me to REI is the day to day handling of my investments and dealing with tenants. I know this is not for everyone and, one day, I may want to turn everything over to a property management company, but for the last 5 years it’s been a great learning experience. The more I do it, the easier it gets.

    • Eric D.

      Thank you for listening!!

      You can definitely exponentially increase your earnings from RE is you are more hands on. You may never be able to get a $1M a year being hands on, but you generally do not need that much to quit a day job…

  6. Nathan G.

    I really enjoyed this podcast. I prefer hearing from the small-time investors vs. guys in suits raising funds and buying multi-million-dollar deals that most of us can’t fathom (nor do we want to).

    Eric’s system is a good one but I hope people don’t get too wrapped up in it. Being a DIY Landlord works great for his goals and there are some good lessons that can apply to any of us. However, everyone is different and we have to be willing to assess our personal goals and determine what will work best for us.

    I’m renovating an 11-plex right now and there are some things that I’ve done myself and some things I’ve hired out. Would it be cheaper for me to clean the walls? Yes, but it would take me an entire day to do it myself or I can hire someone for $200 to do it for me so I can spend the day with my family. Can I repair the sheetrock and paint an apartment on my own? Absolutely! But I have a busy schedule and kids to raise so it would likely take 2-3 weeks to finish the job. Instead, I hire someone so it’s done faster and the additional rent income nearly pays for the contractor.

    DIY is great. So is hiring a contractor. Self-management is great. So is hiring a Property Manager. Saving $100 an hour on a plumber is great. So is being available for your kids. Everyone needs to assess their personal situation, goals, skills, goals, budget, and other factors to determine what is in their best interests. You can’t make blanket statements that a particular method is best for everyone.

    • Rob Cook

      Nathan, you make good points. And in the largest sense, especially. That REI is a “big world” and there are as many ways to approach and participate in it, as there are participants! I wrote some blog posts (for future posting) last week, which discuss exactly this, regarding property selection to fit one’s own personal tastes, capabilities and situation. Just as there are many ways to finance a property, there are many ways to operate as a landlord. Being an entrepreneur, I have often admitted I am not as good a manager as I would like to be. Often those two disciplines and skill sets are at odds. But I am learning, still, almost daily. And being involved and active in my rental business, is how I learn and improve. Even the same investor, will morph and evolve over time, thru the seasons of both their life and their RE journey. We both know successful investors and landlords who are older now (me!) and have to adjust to their new realities, that they are not 30 years old any more, and the physical part of being hands-on is simply not the same now. Or as you pointed out, during child rearing years, family demands much more time aside from work, than it does pre-kids, or for empty nesters. Change, what makes life continually interesting!

      All of the above said, it is still my own personal reality and opinion, that as difficult as it is to find good rental property deals, everywhere, it is far more difficult when the typical old properties that qualify as “good deals” require retail priced fixup hiring, including renovation, repairs, maintenance and CapEx over time. So, in my own personal situation, being both able and interested in being hands-on with the work on my properties, gives me an edge, the ability to make deals work that otherwise would not. Sure, theoretically, the opportunity cost of my time is much higher than what I could pay someone else to do the work, and I could afford it. But in reality, this is a myth, unless one is already working 50+ hours a week actually billing all of that time at your theoretical, high hourly pay rate. For example, someone claiming their time is worth $500 an hour, because, they do 2 hours of work a month at that high rate, is bogus thinking, if they actually earn, in fact, a typical (for them) total of $10K a month. The fabled “6 figure earner.” Their actual, avg pay rate is “only” $50 an hour. The point being, performing work on one’s own properties, instead of paying someone else to do it, is not as “costly” in terms of money or financial oppty cost, as one might think. BUT, there are OTHER oppty costs as you pointed out, including time with kids, etc. And that, personal, individual decision and choice is what makes us all unique, and makes the world interesting! Kids grow up whether or not you chose to spend time with them, and you cannot redo those missed moments, so a good reminder that money is not everything! As in my personal case, plenty of time to work on rentals after the kids are grown and gone! Had my cake and ate it too.

      • Eric D.

        You both make great points. When I had a new 4-plex that needed a lot of work, I did hire a crew to help. When you have four vacancies, the opportunity costs is 4x as much as one vacancy.

        If you only have a single vacancy, odds are you can do any rehab cheaper than hiring it out, even when you include the vacancy costs.

  7. Christopher Smith

    From a value added standpoint I just can’t imagine DIY is the way to go. In this regard, a factor which to me is huge and very rarely gets recognized is that professional management (beyond performing all the dirty work) also establishes a risk legal liability buffer for the property owner. This is really of vital importance when you have at least some of your properties in a very litigious state that is vastly tenant law favorable (as I do).

    The only way I could possibly justify DIY is if I just flat out loved being the building sup, A/R clerk or rapping with my tenants (none of which I have even the slightest interest in). But to each his own.

    • Eric D.

      Thank you for listening!

      Everyone has their pain points. Many investors just flat out do not have the money to hire it all out. You seem to have quite a bit more leeway in your financial picture.

      If you are worried about getting sued, get out of the landlord business. I have never been sued, but I know the most likely way you get sued is not returning the damage deposit.

  8. Rob Cook

    Christopher raises a common, and popular point of view here. Of course, we would all prefer being a landlord to be a truly passive income. It simply is not. Maybe, when the portfolio or complex is so large that a professional ASSISTANT can be afforded by the owner, and I do NOT mean a property management firm. But a dedicated, full time employee of the landlord, who, steps into the landlord’s shoes and assumes ALL of the responsibilities the landlord has. Rentals are a business, not a passive investment. Like all businesses, there is a spectrum of owner involvement. Some McDonald’s restaurant owners are complete absentees, others are the store managers. And every level in between. Same with rental landlords. And as Christopher said in his last sentence, “but to each his own.” That said, I, like you Eric, have been doing this a long time, and have a lot of properties and experiences, and we are both educated professionals in our “other lives.” We still elect to be hands on, and it works for us. Yes, I enjoy the work, and the process, even though I retired many years ago with an passive, annual income of 7 figures (Yes 7, not 6). And though I am not even close to being in my tenants’ socio-economic “class” I still do not avoid interacting with them or think any less of them as humans. And it is MY choice, to be a landlord, and our tenants are our customers. THAT is the key many miss in landlording, thinking they are back in feudal times where they are a super class and all their subjects are peasants to be used and exploited like cattle.

    I have over 30 years of very involved contracting business experience, in a market where nearly half my customers (homeowners) are attorneys. I still own this residential remodeling firm in Arlington, VA, passively for the last 20 years as a complete absentee owner. I actually went to and graduated from Law School 20 years ago, because of the litigious nature of my business and customers. Yet, in thousands of transactions and hundreds of properties, including being a Real Estate Broker, construction company owner, landlord, etc. I have NEVER been sued by anyone, ever, BECAUSE I am involved and engaged in my businesses. Agents, such as property management firms do NOT shield a landlord at all legally, other than probably compliance with housing laws, which you and I do ourselves Eric.

    Wholesaling and Flipping are not passive either, but at least you can avoid tenants if that is a fear. We are able to multiply our returns and wealth directly as a result of our hands on involvement. Good luck to those who can do it truly passively – I have bought MANY of my rental deals from investors who tried and learned otherwise, and dumped the properties at the low prices I always pay!

  9. Rob Cook

    A followup thought re Christopher’s comments. A Landlord not being interested in his business (Properties, tenants, etc) is akin to a Medical Doctor not having a bedside manner because he does not want to engage with his patients. They exist, and we all despise them once we see them in action. Or an ER nurse or Doc who does not like blood. Or a police officer who does not want to get his hands dirty cuffing a perp in a ghetto. Some jobs are just not hands off. Landlording for the most part is one of those, IF you want to make money consistently at it.

    With the razor thin puny cash flows we all work for as landlords, and the usual 40 plus age of the properties we can afford as rentals, one of MY realities and experience has been that there are always too many repairs and issues that arise to wipe out that small net cash flow, and having to pay outside tradesmen $200 to do $15 repairs is a sure way to being stressed if not wiped out.

    I am “sure” (Not really) there are some investor landlords who are closer than I am to being a passive investor, but they cannot compete with us as hands on DIY operators. We have lower costs, better tenant retention (which is the key to decreasing our highest expense=turnover), less surprises, less tenant problems and a better grip on every aspect of our properties and business.

    We leverage our DIY time investment, big time, in the long run. E.g., By going out to unclog a toilet ourselves, we not only handle the problem ($50 to $200 savings right there instantly), but we also, see our tenants. I give them my cell # and get theirs, as often this is the ONLY time I meet them since we have most of our properties managed. I often school them on how to avoid the next hair clog in the tub, or what to do themselves when the furnace does not seem to be lit (wipe off the heat sensor, etc). They all appreciate this greatly and it makes them respect me, and my property! May are profoundly ignorant of almost anything to do with a property, so they appreciate learning how to be more responsible occupants and people. Sometimes, I have not even been in the property since I bought it, perhaps many years prior! SO I welcome the opportunity to see and inspect, and I am WELCOME when their shitter is clogged up – not intruding on them! I develop a relationship with the tenant when I am face to face, you know BUSINESS 101 ! And they then feel free to call when a problem is small, so I can head off potentially much larger expensive repairs that would have resulted had they “let it go” long term.

    I cannot imagine running my business any other way, and I have done long distance landlording too, where I do hire help when needed.

    • Eric D.

      Thank you for listening!

      Very succinctly worded response. You are 100% correct. A rental is a business, and the more time you invest in the business, the more rewards you get. Even absentee landlords get calls by their property managers.

      I am not quite at 7-figures of revenue, but my net is certainly well above what I need to live on. And I still paint and clean, among many other things…

  10. Steven Bonfante

    I absolutely took away a tremendous amount of information, motivation and advice from this podcast.

    Even though I am still in my infancy (working on a live and flip short sale), this is the kind of RE investing I am working toward. My goal is to support a nice minimal lifestyle and enjoy new experiences.

    Having owned a few primary residences over the years I am familiar with DIY and not afraid to learn more. The bonus value of DIY, other than saving money, is the intimate knowledge you get about your property. Which is most helpful when the time comes that you have to hire someone in.

    This is clearly one of my favorites and the most helpful to me. I will be following more of Eric.

Leave A Reply