Kevin Coyne on the Del Walmsley Radio Show
Today while you are listening what I want you to do is check your ego at the door. I want you to check your ego at the door. That came from a long time ago—“We Are The World” song that was done to help some kids, starving kids in Africa. It was done by a lot of big artist people like Michael Jackson, Bruce Springsteen, Diana Ross, Bob Dylan, all kinds of people many, many years ago.
And at this time it was Quincy Jones, the great Quincy Jones, producer and Motown director, et cetera, and he was coordinating the whole thing. They recorded all night to create this album to help these starving kids in Africa. He put a sign out because he had all these huge stars, big stars, international stars there—lot of egos, and he put a sign up “check your ego at the door” and they listened and followed and they all worked together and collaborated and raised a lot of money to do good things. So what I am saying is checking your ego at the door.
Why Wait?
And you know Del had a great show yesterday talking about, you know, do something now. Why wait till 62, 72, 82? I mean, enjoy money. You know, why not enjoy it when you’re young when you can. And unfortunately we don’t listen enough. When we’re younger, of course, we are bulletproof. We don’t think we do abusive things to our bodies. We don’t sleep enough. We stay out late. We maybe enjoy some refreshments late or other things people have done when they’re young, and it’s just nuts.
And that also as we get into the corporate world we get some progress and what do we have the itch for? We have the itch for owning our own business. I could do that. We see someone else doing their own business owning a restaurant or a bar when you’re younger or a store, or you know, a plumber wants to own his own plumbing business or chef wants to have his own restaurant. We see those things and we just say, hey, I can do this.
Are You Listening?
And what do a lot of people do when they go into their own business? They go out there and they think I can do that. And they go out there and they start their own business. And what are the statistics about people in their own business? Well over half of new businesses fail within the first five years. Then what happens the second five years? The other half that are still in business they fail. They don’t reach ten years—very few ten. In fact, I think it’s up to like 90 percent of small businesses fail, do not make it to ten years. And why does that happen?
It’s because we are not listening. We are not following the right path. We are not following the right mentor, our egos get in the way, and so we just move on and don’t listen.
What Is our Target Market?
KEVIN: We have got a caller. Rob is on the phone. Rob, how can I help you?
ROB: Yes. I have thought about buying property to rent and I was just wondering what you think the best income group would be best to appeal to? In other words, people who want to rent a $150,000 home or people who want to rent a $400,000 home or people who want to rent a million dollar home?
KEVIN: Well, what we really do on single family homes is we really like to see rent around a thousand dollars or less ‘cause that market is huge. You know, the people that are going to rent the million-dollar home, there aren’t that many out there.
ROB: Right.
KEVIN: So you buy—basically what we like you to do is buy a house say $60,000 or 60 to $70,000, put your rehab in it—let’s say put 10 or $15,000 worth of rehab in that. You are buying it hopefully at 60 cents or so on the dollar. You put your rehab money in, you’ve got closing costs, you’re capturing maybe 20, $30,000 in equity, and you are renting it for, you know, 900, 1000, maybe even 1100. But we really like to stay around that thousand dollar range so that you are making, you know, 100, 200, $300 a month cash flow, because that’s where the population—that’s the huge market is right there. So yeah, it would be nice to buy even 150, $200,000 home even capturing say 50, $60,000 in equity which you can right now on houses, but getting it rented and getting the right person to rent it at that level is a lot harder than targeting that thousand dollar a month level.
ROB: I see. Okay. Well, I thank you very much.
KEVIN: Okay. Does that make sense?
ROB: Yeah, it does. I just worry about buying homes for lower income in terms of the permanence that—how long are they going to stay in the house, are they less reliable than people that can afford a larger house—that sort of thing is the worry.
KEVIN: I have seen—well, Rob, I tell you what, I have seen people at all income levels tear up houses. I have seen people at all income levels tear up houses. So what you do is you screen the people properly, you check their income, make sure they are making the right income. You do a criminal background, you do a credit check on your renters, and you put good tenants in there and that helps prevent it. I mean, it’s all a system. You rehab it correctly, you target, you find out what the comps are in the area to rent it for, and then you have got—you know, you screen the right people, do the right criminal and credit background checks, and you put good tenants in there from the start. And a lot of times they’re there for a long time.
ROB: Right. Okay. Well, I thank you very much.
KEVIN: All right. Thanks for the call. That’s a great question. But you know, the population—you keep your rent around a thousand dollars, you have a huge market. The higher you go up, once you start hitting 1200, 13, 1500, 2,000 — are there people that rent at that level? Absolutely, but the market is not that big. It shrinks the higher you go up, the market shrinks. Yeah, like I said, there’s going to be people with million dollar houses that are rented, but how many are there out there, and how long you going to sit on there waiting for it?
You know, the way we do things, the way we show you to do things is that you close, you put that sign in the yard, and lot of times that house is rented even before it’s ready to have people move in. So what’s that mean? Positive cash flow almost immediately from the time you bought the property and that asset, the money you have in that asset is making you money and giving you a return immediately. It’s that simple.
