Is it really possible to retire with just two rental properties, or is that too risky? When's the time to hand the keys to a property manager before a rental property starts running your life? With home prices sliding in some markets, how do you keep from catching a falling knife when you're calculating property values? And what do you do if you need to sell a rental property, but the tenants still living there? These are just a few of the questions I'll be answering in today's Ask Coach episode. Let's get started. Welcome to the podcast Real Estate Investing with Coach Carson. I'm your host, Chad Carson. You can also call me Coach Carson. And in this show, I teach you how to use real estate investing to achieve financial freedom so you can spend your time doing more of what matters. I'm going to jump right into these questions and get to as many as I can in this episode. and these first group of questions are coming from members of my rental property mastery community.

If you haven't heard of that, that is my private community where I do teaching and coaching. We have a 300 member cap. But if you're interested in learning more about it, you can see a link to rental property mastery in the podcast or the YouTube description below. So this first question comes from Shar to Var, and it has to do with

financial routines. And specifically, she said, what do you do on a weekly or monthly basis with

your finances and your rental business? And which numbers do you actually sit down and review to

make better decisions in your rental business? I love this question because this really gets down to

the operations, the nitty-gritty of a real estate investing business.

So I'll kind of go from weekly to monthly to yearly on how I think about this.

And on a weekly basis, I don't actually review a lot of finances.

What I do is pay bills weekly.

And most of my bills are paid by my property managers these days.

Like if a plumber has to fix something in a property, then the property manager pays for that. Sometimes I need to authorize an expense. If it's over 800 bucks, I think, is my number these days. Then they have to call me like a refrigerator is over 800 bucks. They'll just send me a text or an email. I'll approve that and then they'll handle it and pay for it. But I do pay some bills, especially if they're larger. And so I like to

just, you know, check that out, look at our bank account, make sure we have enough money in the bank. But that's really what I look at on a weekly basis. I work more on a monthly basis with my bookkeeping. And in the past, I've done my own bookkeeping more recently in the last couple of years. I hired a bookkeeper, and it's been a wonderful thing to have them do the everyday kind of stuff.

So they enter all the... recently in the last couple years, I hired a bookkeeper, and it's been a wonderful thing to have

them do the everyday kind of stuff. So they enter all the numbers. They take the property

management reports that we have and enter those into our QuitBooks file. And then what I do

is actually personally review something called a KPI spreadsheet, key performance indicators.

And if you look at most businesses have these kinds of things, but it's just, it's almost like taking a pulse on your business. I compare it to like, you know, a patient, a medical patient. You want to know what their blood pressure is. You want to know their heartbeat, things like that. Well, it's the same way with your rental property business. I like to know the total rent we've collected that month for all of our properties. properties and then I want to compare that to what we should have collected. So if you total up all of your potential rent that you could have collected that month, what is the actual rent and what percentage is that? And I want to see it, you know, 98%, 97%, 100%, 100%, 103%. You know, I want to see around 100%. And as much below that, then that's kind of a red flag where I want to ask some questions and figure that out. So that's the first thing I look at. I also look at after expenses, so the net operating income. So you take the rent we collect and then all of our expenses, including taxes and insurance that we set aside and everything. I want to know what the net operating income is before we make our mortgage payments. That's a really important number in real estate. And then we go one step further and say, what's the actual cash flow after paying all of our mortgages, all of our expenses in our business? That's the bottom line number. And I really want to see that. And I want to see how it fluctuates from month to month. So I had this chart. And every single single month we updated and I can see what it was last month, the prior month, the year before, and I can see some of the seasonality and the patterns we have. For example, in August of every year, this is our turnover year for a lot of college student rentals. That's when people turn over. So that's also when we're doing a lot of repairs on properties in between. So we'll have huge expenses in that month, and I'm typically not having as much cash flow in that month as we do in other months. So I just get used to that and kind of know that's a pattern. So beyond that, the other thing in the KPIs, we look at just the cumulative cash flow for the year and how much money is in the bank. So all this really has to do with cash flow, the revenue coming in, revenue going out. I will do more detailed analysis on an annual basis. So I like to look at a profit and loss for the whole business. So cash flow is one thing, but you also want to look at how much profit you're making. I want to look at the balance sheet. I want to look at our net worth and just update that. I would ideally do that every quarter if I could, but every year is kind of more realistic for me where I update all the values of our properties roughly, the equity we have in the properties after we paid some debt down, and then any other investments I have, just kind of totaling that up. I find this really helpful. I think I was reading the book, The Millionaire Real Estate Investor by Gary Keller a long time ago. And he said that one of his mentors told him the number one habit he had and he recommended that Gary do is to write down and track your net worth. And he actually had him do it like every month or every quarter. That's probably the best, best habit. But what you track and what you pay attention to is what you improve and what how your business improves.

So all of these things, my key performance indicators, the amount of rent we collect, our expenses, the cash flow.

If I pay attention to that every month, then I'm managing that.

I'm trying to improve that.

And so I find that's really helpful to have these kind of higher level indicators of your

numbers. And then every once in a while, I don't do this every year, but I've been doing that a lot

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