Kirk Du Plessis  02:58

Right now the mix that we have is we still have a couple single families, we have them in a couple different states. Now we’ve done some partnerships in Tennessee, and we have sold some of our property in Virginia now. And we have student rentals, we have two student rentals right now. Those are once a duplex. One is a regular house, but larger house, couple duplexes that we have that are around here, so not single families.

Kirk Du Plessis  03:21

And then we have two vacation rentals, which are relatively new over the last three years that we’ve added. And those are larger houses, five to seven bedrooms and those houses and specifically for seasonal vacation rentals. And we truly enjoy that, very, very fun properties.

Emily Du Plessis  03:40

Yeah, I think I’m trying to count because we’ve been like unloading and, but also buying. I think we’re around 14 or 15 doors at the moment like workbench and we’ve just sold a handful off.

Kirk Du Plessis  03:50

And we have a flip. Right?

Emily Du Plessis  03:51

Yeah, so I didn’t think that one. So yeah. So you know, we’ve done a little bit of everything. And it’s been fun to kind of go the full circle, actually. For the longest time we got into it, and I was like, we’re gonna hold these for 30 years and never sell them. But it’s been fun to get them and watch them grow. I mean, some of the ones that we started with as condos and townhouses, I mean, they almost doubled in value from the time that we bought them. And we didn’t mean to do that it just happened the way the market was. And then we were able to sell them off for a huge profit. So it’s been a learning experience.

Robert Leonard  04:19

So there’s an interesting dynamic that you guys mentioned in there, you’re selling off some of your portfolio, but you’re also still buying and you’re doing a flip, usually, people would start selling off some of their portfolio because potentially where we are in the market cycle, I could definitely argue that and agree with that. But that would help me that I shouldn’t be doing a flip or I shouldn’t be buying more property.

Robert Leonard  04:39

So talk to us a bit about how you’re comfortable doing those acquisitions and flip while also trying to hedge your risk and sell some of your portfolio or maybe you’re just selling them for different reasons. Maybe it’s because you hate those properties. Talk to us a bit about that.

Kirk Du Plessis  04:52

To me, I think it’s more of a transitioning of the portfolio. So like as we’ve grown as real estate investors, we’ve learned that we like to do something, so we like some properties. And now we like other properties more, and we, you know, maybe don’t have the appetite for doing the properties that we have in our portfolio or that we started with.

Kirk Du Plessis  05:10

And so, you know, part of our process has been that we don’t want to be pigeonholed to saying, like, oh, we bought this property, and we’re gonna hold it forever. And so some of the properties that we’ve been selling off are properties that don’t fit what we would classify as, you know, new deals for us, right.

Kirk Du Plessis  05:24

So properties we’ve been buying are, you know, slightly newer, a little bit bigger, more stable rental market, you know, a little bit nicer properties we’re spending a little bit more money on, and we’re selling off some of the properties that are a little bit smaller, a little bit less pricey, older, maybe not as good area, you know, that we had gotten into before. And so we’re trying to transition. In fact, we’ve done a number of 1031 exchanges, just to do that process, right.

Kirk Du Plessis  05:49

So we’re not, you know, selling and just taking the money and running, we’re literally just keeping the money in there to snowball as much as possible. So we 1031 Exchange properties that have gone up in value, and that kind of older, different area. And we started by a little bit better, higher quality properties, the flip properties just interesting, because, you know, like, I stumbled onto it, yeah, all the flips that we’ve done, we’ve done three flip properties now. Now, this is the third flip property that we’ve done.

Kirk Du Plessis  06:09

And to me, it’s, it’s an opportunity that if it comes up, I can’t walk away from it, if I see ice cream for $1, like, I’m gonna buy it. For sure, guys, because it’s just a good deal. And so if you, you may not need ice cream at the time, but you’re gonna buy it. And that’s how these deals came up. So like the flip property was a great deal, the lady went through a short sale, we were able to negotiate really, really good, you know, deal with the bank and the financing around it. And so we don’t want a flip property right now, necessarily, but we could see how it could easily be a good property for us to transition.

Emily Du Plessis  06:48

And the reality is because we got a personal trigger deal, we were able to pay cash so that we don’t have a lot of like, pressure, we’re really going slow with it. We’re actually like training our new assistant. Yeah, like we’ve hired a new like real estate assistant to help us out with a lot of stuff. And so like, we’re really like trying to train her on how to manage it. And this is her pet projects. So like, we’re not in a rush. We’re taking our time. And so it’s nice to be to a point where we’re able to do that. And we don’t have that, oh, my gosh, we have a mortgage payment and taxes and this and this and this, we’re able to kind of take our time with it.

Robert Leonard  07:16

Yeah, that’s a very different situation than someone who’s entering their first flip right now and who’s trying to learn financing. Yeah, with hard money. Exactly, exactly. So it’s a very different and that I’m glad that that I asked that, because that’s a very distinguishing thing. And I think it’s important for listeners to hear because they might hear oh, well, Kirk and Emily are doing flips, I should run out and do some flips, too. And it’s like, wait a second, let’s really dive into that and learn about the actual situation before we just go out and, you know, take action on that.

Robert Leonard  07:19

And it goes back to knowing your market, like most markets are up right now. So I would be very hesitant to jump into something that would be that kind of investment.

Kirk Du Plessis  07:53

And I would say like even still like so the one other vacation rental that we bought last year, you know, we have been looking in this area for potentially vacation rental for four or five years. And when I say looking, it’s not just like we’ve been looking online, we’ve gone down, we’ve looked at property after property after property. And literally nothing made sense. And we almost just wrote it off.

Emily Du Plessis  08:15

They were ready to write it off for like, we’re like, oh, maybe okay, maybe in 10 years, or, you know, revisit it because just the numbers never work.

Kirk Du Plessis  08:22

And so we found a deal where the guy was super motivated, the price was dropping like a rock, we offered a really low price, and he took it. And so like that, to me is why we’re still buying property. We’re not trying to buy property at the top, we’re trying to buy everything that we can, that’s a decent property, little bit below value. Not this like crazy crazy, but just like a little bit below value. I think it was just an amazing deal. So we jumped on it so.

Robert Leonard  08:47

So when you talk about those Airbnb properties, those vacation rentals, some people love them, because the returns are often amazing. And then some people hate them because they are often labor intensive. So have you guys found that it’s a super labor intensive property of yours? Or do you use a property manager or other returns just worth it you’re willing to put in the work? Or do you guys use those properties as vacations? Or is it strictly just an investment property?

Emily Du Plessis  09:13

We have property management for both of them. So for us, I think what we love about them is the fact that they are hands off because we’ve self managed everything for the amount of years that we’ve done this. So the fact that we have these great properties that we don’t have to manage is actually really, really great. So that’s one aspect of it.

Emily Du Plessis  09:31

The other aspect is that we have two of them, we have one that’s actually only about two hours from our house. And we use that one a lot, actually quite a bit. And so that’s awesome to be able to have a place that you can run out when you’re not going to be there but yet it’s a place where we can go in the summer. It’s a ski resort and also on a lake so like we can be there in the winter, we can be there in the summer. People rent it all year round. It’s great in the fall, there’s hiking, so it’s a year round rental, which is really, really great.

Emily Du Plessis  09:57

The other one is I would say more of a investment. We have not stayed at it yet since we bought it, mostly because it’s booked. So it was booked all last summer. It’s in an outer bank. So it’s like beach area. And it’s booked all summer again this summer. So like, that one’s booked. So that one is much more of a true blue investment property versus our other one that is more of a investment slash second home.

Kirk Du Plessis  10:19

Yeah, and I think that because it would require a lot more work. You know, we don’t want to do that right now. And I think that there’s a lot of people who maybe want to do that. And I think that’s a good place to generate some extra return.

Kirk Du Plessis  10:29

You know, for us, we knew coming into it for both what the management costs were going to be and how much it was going to cost to do all the linen service and all the cleanings and whatever. And you just build that in your, your spreadsheet, and you see if it works, you know, these are a really good example for me of something that also, for me personally checks the box of adding a layer of protection, liability wise, as a self managing landlord, you have a lot of extra liability that you have to be careful of, you don’t shovel the sidewalks, if you’re, you know, supposed to be shoveling the sidewalks, if you don’t take care of changing the filters, if you’re supposed to be changing the filters.

Kirk Du Plessis  11:05

I mean, there’s so many little tiny things that could just really, really trip you up liability wise. And so having a management company has an extra layer and in place that is doing all the checks and balances that’s going through and you know, making sure the property is okay, and making sure that the tenants are carrying liability insurance for their state.

Kirk Du Plessis  11:24

I mean, it’s just these extra little layers that to me makes sense to do when you also are getting slightly lower returns. And so that’s why we really liked them there hands off a little bit of extra liability protection. You know, I really liked the fact that people have to pay before they come because we’ve gone through some evictions. So I like that aspect that they have to actually pay before they stay there. It’s kind of like a novel concept. That’s really, really fun.

Robert Leonard  11:48

Have you started to worry at all about the Airbnb rentals given where we might be in the economy in the recession? When it comes to Airbnb rentals. returns are good when things are good. But if people aren’t traveling, which is an issue because of the Black Swan event that we’re dealing with right now with Coronavirus, but that aside just a general recession, people tend to be more strict with their money, they don’t travel as much they don’t go on vacations as much. Have you started to consider that? And is that a concern for you guys?

Emily Du Plessis  12:12

That was actually one of our major questions for the agents before we ever bought them was, “Okay, tell us about when there was a recession? What happened? Did people still come?” And so they were able to really kind of paint a picture. And they basically said like the areas, yeah, it wasn’t that bad, people generally still were coming.

Emily Du Plessis  12:31

And they also gave us a lot of advice with location there in these resort areas, and how your location could really play into that you would ever need to like for instance, whenever we were talking to the agent, or the ocean, like at the beach, the Outer Banks property he was talking about like being oceanfront versus being off. And he was talking about, you know, in a situation like that, if you’re oceanfront and you have to drop your price, for some reason people are going to stay where an oceanfront property if it’s the same price as a property that’s bad. So we’re like location can really play into that. So that was one of the first questions that we asked.

Emily Du Plessis  13:02

And I would say, again, we were talking about this at dinner, where we thought there are places where mostly people drive, I wouldn’t say like a ton of people fly to go there. So it’s mostly, you know, within a state two state, three state location, people are commuting or driving to get there. And when you think about like, we were talking, I’m like, okay, well, they can drive there, they don’t have to fly, they don’t have to ride on a train, and they’re going to stay at a house. So you’re pretty much isolated. If you don’t want to go out you don’t have to, or you can go out if you want, so I’m actually not too worried. But I would say if I had an Airbnb in Nashville right now, I’d be a little freaked out that, you know, people would be canceling.

Kirk Du Plessis  13:39

I don’t, I mean, we didn’t plan on that. We know sitting three years ago going, you know, if the Coronavirus really takes off, you know, we should be good here. I think we just got a little bit lucky. But but we were concerned about the recession side of it. And everything Emily said was true, we did take into account the fact that we probably think we’re at the top end of a cyclical market, and you just have to make the numbers work and, you know, really stress test your property. Like I remember testing all the numbers with a 20-25% decline in vacancy and prices. And if it still works, okay, then you just got to pull the trigger.

Robert Leonard  14:11

It’s really interesting to hear that ’cause Kirk, I know, we’ve talked a bit before, I know you’re a little bit conservative. So it’s interesting for me to hear that you’re okay with this. But I mean, it really does just come back to the numbers, right? I mean, Airbnb number returns can be so good that they can weather a 25-30% downturn, or just an increase in vacancy.

Kirk Du Plessis  14:31

If you keep the money, I think that’s another thing too, is like, you know, we knew heading into it with both of these properties. And actually, it’s been like this for all our properties, to be honest. We keep all the money in the properties and like the funds, and we just snowball it year after year after year. And so I don’t know if we’ve ever gone back.

Kirk Du Plessis  14:47

I think we have gone back and like figured out how much we actually put in, but the amount of money that we’ve actually put in real estate versus what we have in equity and cash flow and profits now is probably like really disconnected. In the sense that we put in a little bit of money, because we were able to let it stay in there and snowball into the next, the next and the next next property, then that gives us an added layer of protection so that if God forbid, these properties were vacant for a year, we’d still be okay. Like, we’d be fine. You know, like, we’d weather that storm. So I think it’s a, you know, good returns, and then also being able to keep the cash.

Robert Leonard  15:20

I actually do the exact same thing, I’ve never taken $1 out of any of my rental properties, they always stay right in that property’s bank accounts. From time to time, you’ll enjoy this Kirk, I think is from time to time, once that balance kind of gets large enough, but it’s not big enough to invest in real estate, but it’s enough as a reserve, I’ll do some very, very conservative options trading with that, to just generate a little bit of extra cash flow for the rental while it sits there. I thought you would appreciate that.

Kirk Du Plessis  15:48

I do appreciate that. You know, I love that.

Robert Leonard  15:51

So we’ve talked a little bit about this so far throughout the show. But one of the things I like to do is talk to guests about the mistakes that they’ve made. That way the audience and I can learn from the guest mistakes and not have to actually make them ourselves. So you wrote your guys’ journey from the first deal that we talked about where you are today, what are some of the biggest mistakes that you guys have made?

Emily Du Plessis  16:14

I would say one would be making sure that you really calculate and really pay attention to the capex and the deferred maintenance on a property. I think in the beginning, we kind of alluded to this earlier, the first like handful of properties for condos and townhouses, they were new, they were nice, we didn’t really have to think about capex, then. And we had great returns. So even if there was an issue, there were 20-25% return. So even if there was a capex issue, we had enough cash in there, that it wouldn’t kill us.

Emily Du Plessis  16:41

But then we kind of took that mindset into when we started buying some of the older properties here, like in Pennsylvania when we moved back. And those were some of the older ones with a wet messed up flow, the one property that just has a ton of deferred maintenance, and we didn’t really pay attention to that as much as we should have.

Emily Du Plessis  16:58

So one of the reasons we sold off that house that we hate was because of the deferred maintenance. And the day after we bought it, we talked to the seller, like all these things broke, the hot water tank broke, the furnace, I felt so bad, but like that deferred maintenance that we owned that for one more day would have just killed it. So you’ve really got to pay attention to that.

Kirk Du Plessis  17:17

I would say our biggest mistake so far, is that we have been very lenient with our leases and agreements. Yeah, and I will be I mean, like, this is just as much me as it is Emily, you know, like, we got into this. And we’re very much people pleaser type people.

Emily Du Plessis  17:35

I’m a people pleaser, you are not so much.

Kirk Du Plessis  17:37

But I’m much harder than you are.

Kirk Du Plessis  17:40

I’m good cop, you’re bad cop.

Kirk Du Plessis  17:41

But you know, I think it’s like, it’s so funny and unfortunate. It’s unfortunate that it is this situation. But if you give an inch, someone’s gonna take a mile. And I realized at some point, and so like now our rule is we follow the lease. That’s it. Like there’s no, there’s no, there’s no argument, there’s no leniency. There’s no nothing like, if you are three days late, you get a letter in the mail, you have to follow the lease.

Kirk Du Plessis  18:07

And so we’ve gone above and beyond now, to make sure that not only one like we completely understand our leases, because we’ve been to court and had to do eviction. So we’ve had to learn that process the hard way. But then to that we write the leases the way that we want to operate these properties. And what we tell people now is, look, you have to earn your right and privilege to be flexible, do not be late in the first year, if you make all your payments for the first year, and then you’re late by three days, you know, in year two, okay, you’ve earned the right to be a little bit flexible.

Kirk Du Plessis  18:39

And we’ll let that slide and you know, your kid was sick, or you were on vacation and forgot to put it in the mail, whatever. But if that happens in like the first six months, you know that that’s not a good way to start this relationship. So I think we’ve, we’ve been taken advantage of in the sense that we wouldn’t have been taken advantage of this, wrong way to say, we put ourselves in a position where we did not manage these properties appropriately.

Robert Leonard  19:02

To get around that good cop, bad cop situation. Because I found myself in the same same spot, I’m generally actually pretty tough. When it comes to that type of stuff, I’m usually pretty business-focused. But you know, when people start throwing out sob stories or their reasons, it’s tough. You know, it really is. And so what I do is I never tell anyone that I actually own the properties no one ever knows, I always work for the property management company or something along those lines. And that’s, that’s just kind of how I’ve been able to separate the two because then it’s, you know, I feel bad, but I can be strict with the lease and say, sorry, but that’s what the owner says, right? And it never comes back to me.

Kirk Du Plessis  19:37

I tell people now I’m like, Look, this is an investment for my kids future. And so if you don’t make your payment, I can’t make my payment. It’s just really that simple. And, and I’m pretty straight up with people in the sense of like, look, we’re renting this out because we want to generate an income for this. We don’t use the money. So we keep it in a bank. And if something breaks, we’ll fix it but you got to like take care of the property too. And I feel like that has got a long way with a lot of people, but still, we just have to follow the lease. It’s tough. And you know why like, this drives me crazy. But like one guy that we had to evict, I didn’t know at the time, but he is a serial serial eviction candidate,

Emily Du Plessis  20:14

And then a month or two, and it never showed up on anything.

Kirk Du Plessis  20:17

But let me tell you, he knew every law, every loophole, every little thing that he could possibly do. And so that was a massive learning experience for me. Because, you know, he knew more about the lease than I did, you know, and the laws, which was passing.

Robert Leonard  20:33

I’ve heard that. And I think they actually call him like professional tenants or something along those lines. Yeah, yeah, I’ve heard of stories like that. Knock on wood, I haven’t come across any of that in my investing yet. I probably will as my investing career continues. But yeah, I’ve definitely heard of that.

Robert Leonard  20:48

And it really just comes back to this whole idea of running it like a business because that’s essentially what it is. And if you don’t, and it can even go further is, sometimes if you give someone leniency, you could be technically breaking the law, somebody could come back at you and claim discrimination, or you know, all these other different things, that you’re just trying to do something, something nice for someone, and then it turns into this whole issue that you hadn’t even thought of. You just really got to run it like a business.

Emily Du Plessis  21:13

And I think that is a mistake that a lot of people that are just getting started will make is that they want to be lenient, and they want to be helpful and not realize that how important it is to [inaudible]. So I think that’s really good advice for people that are just starting off and buying that first property.

Kirk Du Plessis  21:29

Yeah, that’s great. That’s a good point about the liability on that side, too. Because like now, like, every call that I make, it’s like the first call is to my lawyer. Okay, here’s the issue, like, how do I do this, you know, just so I’m, you know, following the right laws, and you know, doing it the right way. And, as you never know.

Robert Leonard  21:45

For better or for worse, it’s just it’s just a common thing that’s taking place in our world these days. So it’s a, it is a component that I think people do need to take into consideration. 100%. Emily, when you were talking about the mistake that you guys have made, you mentioned capex and deferred maintenance, for those that are new to real estate, that might not be super familiar with those two terms? Can you tell us what exactly capex is, and also what deferred maintenance is?

Emily Du Plessis  22:09

They kind of a little bit go hand in hand, a lot of times. Capex is really those big ticket items that aren’t, it’s not paying us on carpet, it’s your electrical, it’s a roof, it’s a track. So it’s those big ticket items that maybe need to be replaced every 5, 10, 15, 20 years. But when they do, it’s a lot of money. So even like we mentioned with the sewer system that almost ate all of our profits for a whole year, because we had to do that.

Emily Du Plessis  22:33

So those capex things, you can plan ahead for, which is really cool. So if you’re just getting started, and you’re like, okay, Emily, I’m gonna pay attention to this, there are a lot of really great resources out there. Because when you get a home inspection, you’re going to know how old the furnaces and you’re going to know how, you know, when the roof was last replaced. And so you’re going to say, okay, you know, I have seven years until the roof is going to need replaced.

Emily Du Plessis  22:54

Okay, so if it costs this much X number of dollars to replace a roof from now, over the next seven years, every month, I should be putting this amount of money in a fund to be able to pay for that. That way, when the time comes to do that, you have the money to do it, and it’s not eating into all of your profits.

Emily Du Plessis  23:09

So it’s those big ticket items, that a lot of times you can plan ahead for if you have the knowledge to do so. And there are a lot of great resources out there charts and things that can kind of give you an idea of like averages of how much something is in the lifespan so that when you want to sit down and figure out, okay, like, I need to save for the H bath, or for the hot water tank and the roof, you know, you can sit down and make a calculation so that you can kind of have an accurate number that you can be saving every month.

Kirk Du Plessis  23:35

Yeah. And on the deferred maintenance. I mean, that’s just stuff that you can go through and see, you know, we need a new railing, or we need the deck is falling off. I think that you know, a lot of times, we would go through a property and be like, yeah, the hot water tank looks like it’s gonna blow but I think it’ll go 10 more years. Yeah, I’m like, no, it probably needs to be replaced. Right?

Kirk Du Plessis  23:54

And so I think we did a bad job of not, you know, we got hit with those bills very quickly. Like, you know, the hot water tank blew and we were really, no way the hot water tank blew. But you know, looking back on it, that was a something that already should have been replaced that we just have to factor it.

Emily Du Plessis  24:08

It’s like maintenance stuff that potentially the owner who had it before it didn’t take care of. And then that stuff just ultimately falls on you, unfortunately. And it will. And it will unless you can negotiate some of that into the home inspection. Yeah. Which is worth a try.

Robert Leonard  24:21

I have to say, I’ve taken some chances on some old appliances. Knock on wood, I’ve actually been I’ve had pretty good luck when I bought my primary residence. The boiler is original. And the property is built in the 80s. So it’s older and it’s definitely on its way out. But I said to myself, I gave myself the false sense of hope that I was like oh, they don’t build things like they used to anymore. This thing is gonna last forever. And knock on wood. It’s been a few years. Yeah. And it’s still going, knock on wood.

Emily Du Plessis  24:49

And don’t send us an email tomorrow that says it broke.

Robert Leonard  24:51

I know, I know. Now that we talked about it, it might. So how can somebody prepare for these types of things going into a deal? Should they, because I think a lot of times people squeeze into a deal by the skin of their teeth with the down payment and closing costs, they see that that total number is going to say 10,000. And they go in 10,000 in $1. They don’t keep anything for reserves, things like that, just so they can get into a deal.

Robert Leonard  25:14

Should they be setting aside some money above and beyond those two items to ensure that they have some reserves if those things take place? And of course, if everything inside the house is brand new, then maybe it’s not as big of a deal. But if there’s if it’s an older property with older insides, if you will, appliances, things like that, should they be setting aside that reserve when they first get into the property?

Kirk Du Plessis  25:35

Yeah. 100%. And then if you’re asking, like, how do they do it, and it’s just simple math, like, you just take the, you know, the cost or double estimate, you know, if you think it’s $500, and you’re just guessing, like triple it, you know, like, put that money aside, and just, you know, subtract that out of the money that you have to spend so that you have a reserve. And I would argue, actually, that it’s not necessarily that things won’t break that are new.

Kirk Du Plessis  25:57

You know, we bought one of the vacation rentals, we bought the stove, broke the first day. And we called the lady the first day after closing, and I was like, this stove doesn’t work. And I don’t even remember them. I don’t think they actually really checked on the inspection report. And she was like, yeah, I’ve never used it. It’s just like sat there for like five months. And so it like never worked, right. And it’s like a multi $100 stove, right. And we have to call somebody to fix it like the first day.

Kirk Du Plessis  26:22

So it’s not that things won’t break. Even if they’re brand new, you should absolutely have a reserve, not only for just the things in my brain, but for vacancies and unforeseen costs and like delays and so many.

Emily Du Plessis  26:34

Yeah. And if you’re using financing, a lot of times the banks are going to require that anyways. So if you’re going to go with conventional financing, in most cases to qualify, they’re going to want to see that you have a certain amount set aside to be able to cover anything if something were to happen.

Kirk Du Plessis  26:47

You know what, we actually have a cool story. So we had a property, not a cool story. It was not cool at the time. But we had a property that had a water pipe break, and the water pipe broke. What did the entire thing. Remember down in Virginia Richfield, everything broke, right? And we, so our girl had to move out. And the insurance covered everything, except the insurance payment didn’t come for six months. So we had to float the property and start all the repairs and whatever, for six months. And so like that is something where like, yes, you have insurance. And yes, it will cover the cost. And it paid us back all the money that we had put into it. But we had to float it at first. And I don’t think people think about that.

Robert Leonard  27:26

Oh, that’s a really good point. I definitely don’t think people think about that. Because insurance is great. Even if it does cover everything that it’s supposed to, and then some. That’s great. But I mean, these companies, just the truth is they’re slow. Yeah, they’re slow at paying. I mean, they’re a corporation, they’re going to do their due diligence. And then you know, you’ll eventually get your payment, but it takes time. Have you guys ever done anything with home warranties to kind of combat these types of things?

Emily Du Plessis  27:48

Yeah, so when we first got started, actually, yeah, we have good and bad stories. Actually, you know, one of our, I think it was the second property we ever bought, shortly after we bought it, the HVAC system went. And so that’s huge. I mean, that’s what 6,000 I think it was like $6,500 was the total. And we had a home warranty, and the home warranty covered everything. But I think we had to pay $500 for this cement slab that it sat on. And this was at a townhouse. And so awesome story, right, everything was great, super easy to work with. And then we tried another company with properties we had in Pennsylvania, and it was a nightmare, we couldn’t ever get anybody out there, there was always an issue with them covering things. So we’ve had like, really great success with some, and not so great success with the others.

Kirk Du Plessis  28:29

I think the issue that we have with the home warranties, the way and the reason that we do not use them right now is the delay between the time that something breaks, and the time that they can get an approved person out there. And then that that approved person can actually start work, you know, like the process, the whole process could take, you know, a week or two weeks.

Kirk Du Plessis  28:50

But if it’s the middle of winter, and the HVAC is gone, or they’re in but the heat has gone, like you’re not going to let your tenants sit there for two weeks. Right? And so you can’t wait around for that. And once you start doing it, and you find somebody who’s not approved or not on the approved list didn’t approve the repairs, then it’s all for nothing. And so I think it’s, yeah, I do not think it’s worth it. I don’t.

Emily Du Plessis  29:12

Good and bad. But it is, it’s a process, nothing happens fast, because it’s all about approvals, and then approvals for approvals. And so just be aware of that, if you’re going to do it, then just be aware that it probably will not be fixed quickly.

Robert Leonard  29:25

So do you think that it’s the differences between the companies that are providing the home warranty themselves? Or do you think it could be a component of and maybe the city you guys are investing in is big, so maybe this isn’t a reality, but do you think it’s the size of the city? Because if you’re gonna if you’re getting a home warranty in a small town, right, it’s probably hard to find these types of people that are approved to do.

Emily Du Plessis  29:43

So that’s our issue now. We were in a small town, where we were in Virginia, it was much more suburban, like suburban area and so. And it, but it could be the company too. They just generally were better to work with than the company that we used where we live now. So I think it’s a little bit about it, honestly.

Robert Leonard  30:00

Yeah, that’s kind of what I was thinking I, I’ve used only one company, I’ve done it a couple times with a couple different properties, but it was always in the same city. It’s, it’s a decent sized city, a little over 120,000 people. So it’s not super small by any means. So there’s a lot of people in their contractors, you know, different types of professionals that can go in and do that work. So I’ve actually had really good experience with mine.

Robert Leonard  30:18

But I think I could see if you go to a 10, 15, 20,000 population type city that it could be tough to find, you know, approved workers. Yeah. Yeah. As you were telling that story. That was kind of exactly what I was thinking. Yeah, a small town in Pennsylvania, right?

Emily Du Plessis  30:32

Yup.

Robert Leonard  30:32

So with all these different mistakes that we’ve talked about, how would you guys make sure you didn’t get crushed by them? Not just monetarily, I think we’ve covered that. But psychologically, emotionally, how did you continue on after them and not quit?

Kirk Du Plessis  30:46

I have days where I hate real estate. I’ll be totally honest. I mean, like, it’s not, you know, like, I don’t think anybody goes through, they are totally lying if they tell you that, at some point, they, they don’t hate real estate. I mean, like, there are days where I’m like, you just got to be kidding me. I mean, it’s like, it’s just like, it feels like it’s stacking, like, layer on top of layer on top of layer. And those are far and few between and Emily’s way better at managing that than I am like, I definitely have this, you know, I go-

Emily Du Plessis  31:14

He’s a swinger.

Kirk Du Plessis  31:15

Yeah, I’m one when-

Emily Du Plessis  31:16

And here’s what I like, I love it, I hate it, I want to sell everything, I want to buy 100 properties. I want to sell, I want to buy.

Kirk Du Plessis  31:22

I think that we just, you know, you have to have, I think, a sounding board of some kind. And so if you’re doing this by yourself, look for a partner, if you’re, if you can’t find a partner, have somebody you trust a friend that can be just, you know, a confidant that you can, you know, say, Look, I’m having a really bad day, like, you know, help me out, like, talk me off the ledge here. And you know, for me, that’s Emily, which is great, because she’s my wife, and you know, partner in this. But if you don’t have that, I think it becomes very easy to get into a downward spiral by yourself. And I think that that can be dangerous.

Robert Leonard  31:52

I’m actually in the same boat as you, Kirk. And I wonder if we, part of it is because we invest in the stock market. And the reason I say that is because real estate is great, there’s all kinds of benefits that you can get from it, you know, from a tax perspective, appreciation, you know, the really the four pillars of real estate that you can’t necessarily get in the stock market.

Robert Leonard  32:11

There are times where I’m making very conservative options, trades, that make equal cash flow to what I’m making for my rental properties. And I’m just sitting at my computer, it’s just me, I don’t have to deal with tenants or toilets. And I’m like, man, is this real estate stuff even really worth it? Should I just just stick to the stock market? And and so I wonder if it’s us being involved in that type of stuff that kind of adds in that doubt, or just, you know, roller coaster of emotions that we go?

Kirk Du Plessis  32:35

I think it totally is, I mean, for me, I’m 100% like you, I and Emily knows this because I say it all the time. I’m like, you know, we made more money on this trade. And we made like, all year on that stupid property, you know, and like all that crap that we dealt with, with the sewer line, and blah, blah, blah. I guess when I calm down, and I think logically, and clearly, what I realized is that the ability to have real estate as a component, or to have options, or have anything else as a component of your portfolio helps stabilize everything.

Kirk Du Plessis  33:03

So yeah, it’s gonna be really frustrating sometimes. And yeah, the times that you have to go to, you know, the eviction hearing, you know, twice because the guy didn’t show up and you had to reschedule and bla bla bla, like, that’s super frustrating. But I think ultimately, it’s worth it as a component portfolio.

Robert Leonard  33:18

Yeah, and Murphy’s Law, right, anything that can go wrong will go wrong.

Emily Du Plessis  33:22

At the same time. When it rains, it pours. We’ll have nothing for months. And then it’s like everything and like-

Kirk Du Plessis  33:28

Yeah, yeah, that is that’s crazy. Yeah, that’s what gets me.

Robert Leonard  33:32

I guess the other thing about real estate too, is even though we’re stock guys or stock market investors is that you think about 15, 20 years, 30 years down the line, when those properties are paid off, and you didn’t really put that much money into it, it was really paid for by someone else, and you have all of that equity, even if you don’t hold it forever, you just sell it with all the equity, that’s the component that you don’t necessarily get, you know, from options, which is, is a big component of real estate.

Kirk Du Plessis  33:56

I think that’s always the hardest part about about real estate is and even just like options trading, or any investing in general is the ability to be patient, because we are all so impatient, and myself included. And you know, patience is is something that you have to practice. And I think real estate is a great way to have forced patients with your investments.

Robert Leonard  34:14

Yeah, I think that’s a huge component of it as well. I mean, with the stock market crashing right now, everybody just logs onto their computer, they could sell everything they have in a few minutes. Whereas with real estate, that’s just not possible. And I think that actually works to the benefit of investors.

Kirk Du Plessis  34:15

I think it does, yeah.

Robert Leonard  34:17

So we talked about how you don’t need to know everything when you’re just starting out. Oftentimes, just taking action is even more important than knowing everything. But thinking back to when you were just getting started, what specific important things do you wish you knew then that you know now?

Kirk Du Plessis  34:43

I would say that I wish I was more well-versed on the taxes and the insurance and the utility costs, all the ancillary stuff besides the mortgage. I think that you can get estimates and you can try to verify us as much as possible, but really understanding how much they’re going to change or not, or how much they fluctuate during different seasons or not. I think it’s something that I really wish I understood.

Kirk Du Plessis  35:11

Same thing with capex, like Emily said, I wish I would have spent more time going through properties with the home inspector. And I used to do that. After your first couple properties, I was like, I don’t understand this, I’m gonna go shadow this guy for three hours and watch him and ask a million questions. And I learned a lot of that experience. So I wish I would have done that earlier.

Emily Du Plessis  35:32

I think another thing was tenant screening and the management part of it. We didn’t, like that was a part we really didn’t know anything about. We were good with Kirk on the numbers. And the management side was, you know, clueless, and there are so many great softwares that are out there. Now. I mean, there are so many softwares online for property management, and tracking and tenant screening and background checks, and all of that stuff that goes into it, that we just really didn’t know in the beginning. And so-

Kirk Du Plessis  35:57

We were just really excited to have somebody that wanted our property. And so we just threw him in there.

Emily Du Plessis  36:02

And luckily, we lucked out in the beginning, we had good tenants, I mean, our evictions and things didn’t come until like, more recent past. And in fact, both were with student rentals. But that’s another thing. So like we lucked out with good tenants, but I just… yeah, we could have done a, maybe a better job screening them, and not necessarily relied on luck, so much in the beginning.

Robert Leonard  36:24

So everything we’ve learned throughout this episode has been great. And I think it’s been very helpful. But learning all of this information is only one piece of the equation. The other big piece of the equation, and arguably even more important, is actually taking action on everything that we’ve talked about. So for a new investor, listening to the show today, what is the first action step you’d recommend they take after listening to this episode?

Emily Du Plessis  36:46

I think the first thing that anybody like newbie investors can do is just stop and take a self assessment, honestly, before you get out there, and you make an appointment with a real estate agent. Because they’re going to ask you a bunch of questions, and if you don’t have the answers to those questions, you’re not going to get anywhere.

Emily Du Plessis  37:02

So you need to do a self assessment of just your generally your finances, like where your money is, where it’s going, where it’s coming in. Do you have the ability to squat like money to pay a down payment? Are you going to need to partner with somebody to be able to get to a down payment, right? You need to kind of figure some of those things out financially, before you kind of ever start on that road.

Emily Du Plessis  37:21

I’m going to think you have to do a little bit of a self self assessment as to like your why like, why do you want to invest in it? Is it a lifestyle thing? Is it a financial thing? Is it saving for retirement or saving for kids college tuitions? Because it will get rocky, it will get tough no matter what. And so I think having a why that’s really powerful. And something you can fall back on on those days like are, you know, who wants to sell everything and be done with it? And we go back to our why. And that is honestly what just kind of keeps you going. And I think that’s really with with anything in life.

Emily Du Plessis  37:52

But I think it’s really important in the beginning is that you figure out, can you do this financially? What’s going to push you? Why are you going to get in it? What does it look like for you?

Kirk Du Plessis  38:01

Yeah, we talked about this at dinner beforehand. Yeah, that’s what we would do to start. Yeah, all the time.

Emily Du Plessis  38:06

And I think yeah, and it’s a lifestyle thing. You got to think about, like, is this, am I doing it to impact my lifestyle? And I think once you figure some of those things out, then you can start to learn your area. And then you can, you know, get a real estate agent and start going down that road with them.

Emily Du Plessis  38:22

They’re going to be a lot of clarity. Yeah, you have clarity, because then you’re going to get asked questions, lenders are going to ask you questions, agents are going to ask you questions. And if you don’t know those things before going in, you’re going to sit there like oh my gosh, I can’t do this, right? I can’t even answer these questions. How am I going to do this? So you’ve got to take some time to kind of self assess where you are, what you want to want it to look like to kind of get direction.

Robert Leonard  38:45

Emily, Kirk, thanks so much for sharing your story and all the knowledge that you’ve gained over the years from going from real estate rookies to real estate pros. For those interested in learning more about you and connecting with you guys, where’s the best place for them to go?

Emily Du Plessis  38:59

You’re new investor and you’re looking to get started, we have a podcast as well, The Rental Rookie Podcast, we have a Facebook group, a private community of investors who check us out at rentalrookie.com We have tons of resources and it’s really just about sharing kind of you know what you’re doing and sharing and helping and educating and empowering people to get out there and do it themselves.

Kirk Du Plessis  39:20

Yeah, we have a really fun time and we like to choose new words that Emily’s not ever heard on the podcast. That yes, like soup to nuts or something like that. Honestly, we just have a good time just you know, teaching and not even teaching, just sharing what we learn and trying to help some people out because I wish things like this, like your podcast, like other podcasts that are out there communities. And I wish this was around really early when we’re doing this to start and they weren’t.

Emily Du Plessis  39:46

And if they were we just didn’t even have enough knowledge to go by names, but I don’t think there were that many.

Robert Leonard  39:50

So awesome, guys. Well, thank you so much. I’ll be sure to put links to all of those different things in the show notes, also put other links to topics that we talked about so you guys can go read up more on that. Thanks for coming on the show. I really appreciate it.

Kirk Du Plessis  40:06

Thanks for having me.

Emily Du Plessis  40:06

Thanks. We had a great time.

Robert Leonard  40:08

Alright guys. So that wraps up part two of this two part series with Kirk and Emily Du Plessis. I hope you all enjoyed this episode as much as I did. I always have fun when I get a chance to talk to these two. And I hope you all learned a lot from the conversation. I’ll see you all again next week.

Outro  40:25

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