In this interview we are talking to Chad Carson – aka Coach Carson – about various aspects of investing in rental properties and how to grow a successful and stress-free real estate investment business. With a business partner, Chad has bought, sold, financed, and rented out over 100 properties in the last decade.
Young people looking to achieve financial independence have so many options to choose from. Investing in real estate offers many advantages which other types of investments don’t. In your opinion, what’s the most significant benefit of real estate over other investment options?
There are two major benefits of real estate investing over other investment options. The first is control, and the second is simplicity.
Unlike stocks and bonds, real estate is a hybrid between a business start-up and a pure investment. This means you have to get involved, at least up front. But I don’t see that as a negative. That means you can influence your success and have more control over your investment goals.
And Warren Buffett always said to buy investments that are simple and understandable. Real estate is intuitive. We all live in it and use it. And the reasons real estate is valuable make sense to us as consumers. Picking the latest tech stock, on the other hand, is as far from simple and understandable as it gets.
One of our favorite aspects of real estate investing is the variety of options which you have: rental properties, fix-and-flip, buy-and-hold, turnkey, etc. Which strategy would you recommend to newcomers?
If possible, I suggest new investors moving into your investment. You can do this as a “house hack” where you rent spare bedrooms or live in a small multiunit that has extra rentable apartments.
Because you move into this property (i.e. owner occupied), you get the best and easiest financing possible. There are many low down payment programs with great interest rates available.
If you do house hacking right, you can reduce or even eliminate your housing expenses. And later when you move out, you’ll have a long-term rental property ready to go.
Many are reluctant to enter the world of real estate investing because they associate it with the stress of becoming a landlord. You own multiple rental properties to be able to spend time with your family and to travel the world. What’s the secret to managing rental properties and keeping your sanity?
The landlords with the biggest horror stories usually have something in common – they don’t treat their rental properties like a business. When you run your properties like a business, you hire good people to help you, like a property manager. And then you build systems and processes that everyone uses to run your business.
For example, you should have written criteria for tenant screening. This will help you and your manager make better decisions to ensure you get only the best tenants.
It didn’t happen overnight, but I have built a good team and systems. And I was able to travel with my family to South America for 17 months and live off the rental income while abroad.
Airbnb rentals are becoming more and more popular. What would you recommend to investors when they choose the optimal rental strategy – long term vs. short term – for their property?
Using Airbnb short-term rentals can be an excellent strategy to increase cash flow from a property. I think you have to decide if you are willing to put in the extra effort for that increased reward.
Long-term rentals are more steady and passive. I’ve had a single tenant stay for years. This not only means you spend less of your time as a landlord, but you also minimize maintenance and turnover costs because you don’t have to repaint, recarpet, etc. for a new tenant.
Personally, I have chosen long-term rentals because it best fits my life goals of travel and not being as involved in the day to day management of my business. But I’m certainly open to some Airbnb opportunities in the future when it makes sense.
We have heard a million times that location is the most important factor for the success of a real estate investment business. What are the most important factors to look at when choosing the location of your investment property?
I actually look at location in two broad but interrelated buckets: 1) quality and 2) the numbers.
Quality has to do with how desirable a location is. This applies on the big picture scale – like is the metropolitan region a place where people and jobs are moving to. And it also applies on the micro scale, like finding neighborhoods with parks, amenities, and other attractions that make people want to live there.
The numbers keep an investment location grounded to reality. You could have the most beautiful and attractive location, but if it doesn’t produce good investment returns, it doesn’t matter.
But I’ve also made the mistake of ONLY focusing on numbers and ignoring the quality of the location or property. This was a big mistake, because bad locations make the “paper” numbers hard to turn into reality.
You have recently published a book Retire Early with Real Estate. How many properties do you need to achieve the income necessary to retire and how do you get there?
I have seen people retire with as few as 1 high-cash flow property. And I personally own around 90 with a 50:50 partner. The number of properties depends on your own needs, the cash flow potential of each property, and the amount of debt you carry.
But in general, I think people are overestimating how many properties they’ll really need. In my experience, it’s very reasonable to get 10 properties, stabilize them, perhaps pay off some or all of the debt, and live off the income for years. My own long-term plan is to own fewer than I do now.
How many hours a day do you spend on your real estate business nowadays?
While living abroad in Ecuador, I spent 1-2 hours per week on my real estate business. I still pay many of the bills and do some of the bookkeeping. I like to keep my eyes on the money and records, because it gives me a snapshot of the business as a whole.
There are weeks when I spend more time, like right now we had a commercial property come vacant. But in general I spend a lot more time blogging, teaching classes, and hanging out with my family than I do directly in the real estate business.
What’s next for Coach Carson?
I’ve decided that I’d rather help thousands of people buy a few properties on their own than me trying to own thousands of properties. So, teaching, writing, and helping other small investors succeed is my passion. I want to help people use real estate as a tool to achieve financial independence earlier in life so they can do more of what matters.
Thank you for having me!
Chad Carson is a real estate investor and a world traveler. After college, he started investing in real estate together with a business partner. Together they have bought, sold, financed, and rented over 100 properties. When Chad started writing and teaching about real estate investing, he decided to borrow the title coach, following his college career and passion as a football player. Coach Carson lives in Clemson, SC, but he and his family spend lots of their time in Cuenca, Ecuador.
For more tips on how to start investing in real estate and always buy the best rental properties, keep reading our blog.
