Why I don’t manage my rental properties …

Managing your own rental properties sounds like a good idea; you get to save some money – and, you hand choose / hand manage your tenants.

The World Of Wealth (blog) puts it nicely:

Manage your properties yourself!

Reason Number One – It’s Valuable Experience
Managing my rentals has taught me numerous life skills from how to negotiate with a contractor to the best way to (attempt to) collect rent from a deadbeat tenant.

Reason Number Two – You WILL Do A Better Job Yourself

First of all, your property manager may not actually be very experienced. Secondly, your problem may be worse if the manager IS highly experienced and recommended. In that case, you will probably find yourself be at the very bottom of their priority list.

Reason Number Three – You’ll Save LOTS of Money

Property managers and leasing companies don’t come cheap. You’ll pay 6% – 10% of gross rental income directly to the manager. A rental property with 6-10% of cash flow is rare and precious indeed, so hiring a property manager is all but ensuring your cash flow will be negative.

Reason Number Four – You Won’t Save Yourself Any Stress
One of the main reasons I hired a leasing company this summer was because I didn’t think I could effectively handle 3 vacancies while I was traveling in and out of town. But I was more stressed out than ever before! I still worried about when I’d get a new tenant in each unit, how I was going to make the cash flow work in the meantime and how much the repairs were costing.

I can’t comment on how much less or more stressful it would be to manage my own rentals …

… because I have used a property manager since the get-go.

But, my case might be different to yours: my properties were investments, not my source of business income. So, for me, time was more precious than money.

Even so, Dave Lindahl – well-known property ‘guru’ – makes the case for NOT managing your own properties, at least not after the first 3 or 4 that you own: burnout.

Handling all of those “Reason 4” issues that The World of Wealth blog mentions (dealing with tenants, vacancies, defaults, etc.) will stress you out more than you can imagine, then burn you out pretty quickly.

Also, the argument that properties return 6% and property management costs 6%, therefore all your profits go to the property manager, don’t hold water … because, commercial properties (for example) return 6% after the costs of property management are factored in (or, so they should) …

… and, even residential property may return the same – if you purchase cheap and add value (e.g. paint, add a bedroom, etc.) before you rent expensive.

By all means, manage your own rentals, if that’s the way you want to roll.

But, have the expectation (and, build the cost into your calculations from the start) that you will employ a property manager sooner rather than later, because managing your own rental properties simply isn’t any fun 😉

Hot off the presses …

It’s (finally) published … and, available on Amazon in both printed ($9.99) and Kindle ($3.99) versions.

But before you rush out and buy a copy (!), I could use your help:

You probably already know that ranking well in the Kindle bookstore relies heavily on positive reviews.

So …

If you download the Kindle version [ http://www.amazon.com/Share-Your-Number-money-ebook/dp/B009DNXLHY/ ] and leave a review, I will send you a printed & signed copy of the book. Once you’ve downloaded the book & left your review, send me an e-mail [ajc AT 7million7years DOT com] …


Note: if you don’t own a Kindle, you can simply download a free Kindle reader for your computer! Then you can read any Kindle version on your PC: http://www.amazon.com/gp/feature.html/ref=kcp_pc_mkt_lnd?docId=1000426311



Author shares personal story on wealth, explains how readers can also profit

Adrian J. Cartwood explains how he made $7 million in seven years after being thousands of dollars in debt in “Share Your Number: How Much Money Do You Need to be Happy?”

(PR NewsChannel) / September 20, 2012 / CHICAGO

“Share Your Number How Much Money Do You Need to be Happy?” by Adrian J. Cartwood

When Adrian J. Cartwood decided to make some personal changes in his life in order to get out of debt, he didn’t realize that in less than a decade he would amass over $7 million in wealth. In “Share Your Number: How Much Money Do You Need to be Happy?” (ISBN 1453888004), Cartwood has partnered with freelance writer Debbie Dragon to share his secrets in hopes that readers will also find success.

“Share Your Number” is designed to help readers find a purpose to their lives, which will excite them into action, argues Cartwood. His goal is for people to realize there are possibilities that are bigger, more important and more fulfilling than their current 9-to-5 job allows. The book aims to help readers avoid potentially devastating financial mistakes while assisting them in determining how much is needed to live a dream lifestyle.

Readers are introduced to a process of steps designed to achieve one’s goal of financial independence and wealth. These steps vary from simply calculating the number you feel you need to selecting investment tools and discussing your financial plans with like-minded people who can offer support in reaching that number.

Cartwood was inspired to write the book based on the experiences with his own personal success and struggles. He believes this book can be regarded as a precursor to other personal finance books because it is the only book that aims to help readers visualize their personal goals as a clear-cut financial number to work toward. His book takes the process a step further by showing people exactly how to get their cash into the bank.

“I’ve personally seen that there is more to personal finance than what meets the eye,” says Cartwood. “I made millions in business and investing; however, there was no one to prevent me from making basic financial mistakes, which nearly bankrupted me.”

Cartwood explains that there are thousands of personal finance books informing people how to save money over the course of their working career; his approach differs in that instead of saving for the future, he details how to make money.

“Most people tell you how they did it and charge you for their secret system, which generally involves saving in a retirement fund or trading shares. I started out $30,000 in debt and made $7 million in seven years through several businesses, property investments and joint ventures,” says the author.

“Share Your Number: How Much Money Do You Need to be Happy?” is available for sale online at Amazon.com and other channels.

About the Author: Adrian J. Cartwood found himself $30,000 in debt, and knew he needed to change something. He decided to do some personal accounting to figure out how much money he needed to live the life of his dreams. After just seven years, Cartwood accumulated more than $7 million in his personal accounts. He now spends his time teaching others how to do the same thing.

Adrian J. Cartwood
Email:              ajc@7million7years.com



Why the poor get poorer …

What’s your favorite excuse for not having $7 million? Let’s make it easier: what’s your excuse for not having $1 million?

It will probably be something to do with lack of luck, opportunity, income, and so on …

And, that may all even be true (but, if you keep reading this blog, you’ll find that all changes pretty quickly).

But, tell me what excuse anybody has for not being able to retire with a paltry $1 million in 20 to 40 years time?

Take a look at the chart above: people on low incomes are spending nearly twice as much on entertainment as they spend on saving for retirement!

Now look at the same comparison for other income groups:

That ‘saving for retirement’ ratio reverses as income increases …

But, take a look at those earning high incomes of $150,000 or more: they spend nearly 3 times as much saving for retirement as they spend on entertainment.

So, let me pose a question:

Was it their high income which allowed them the ‘luxury’ of putting away so much for their retirement?

Or, was it the same mindset that compelled them to begin thinking about their financial future that set them up to:

1. Increase their income so greatly, AND

2. Save so much?

I know what I think. How about you?

How do I make money?

That’s probably the most common question that I am asked: how do I make money?

Specifically, how do I make a LOT of money [AJC: not me – I have enough – but, you. How do you make money?].

The answer, of course, is to do what others do not …

… because, most others – the vast, vast majority – are not rich.

Clearly, what THEY do is the way to make only a small amount of money. And, what they do a little of is: invest.

It stands to reason, that you need to invest a lot. But, that’s difficult if you don’t have a high income.

That’s why I say, if you want to make money, you should increase your income – a lot – and invest most of the increase.


But, that brings us right back to the original question, albeit altered slightly to now read:

How do I make a lot of income?

Fortunately, that is much simpler than you might think …

… you simply need to find the intersection of things that: 1. you love doing; 2. other people want; and, 3. you’re good at:

I have a simple exercise that I teach, if you want to find the ‘sweet spot’ where your passion, talent, and opportunity align:

Think about each of these areas of your life:

EARN (i.e. how do you make money, or WANT to make money: past/present/future?)

SPEND (i.e. how do you spend money, or WANT to spend your money: past/present/future?)

ABILITY (i.e. what are you good at? what do you wish you were good at? what sparks your creative juices? what do you enjoy?)

DO (i.e. what are your hobbies? qualifications? jobs (unless already listed under ‘earn’)? what would you WANT to do, even for ‘free’?)

Somewhere in these four areas is your passion … and, these 3 simple steps will help you uncover it!

Step 1:

Take a blank sheet of paper, turn it sideways (landscape) and write down the following column headings:

EARN      SPEND      ABILITY      DO

Under each of the above headings, write 4 to 6 one/two/three word answers (e.g. teach; clothing; writing; wood-working; etc.); let the ideas flow and take as much/little time as you need

Step 2:

Once you’ve completed the above, take another sheet of paper and write the following numbers across the page (I recommend landscape, again):

4          3          2

Now, under each, transfer your answers from the first sheet of paper, as follows:

4: Write the items (if any) that appear (at least in some sort of similar/related form) across all four columns in the previous list; you may not have any.

3: Write the items (if any) that appear across exactly three columns in the previous list; you may have only one or two, if any.

2: Write the items (if any) that appear across exactly two columns in the previous list; you will likely have a few.

These, starting with the ’4′, then ’3′, then ’2′ columns, are where you will you will most likely find your passion!

Step 3:

Try combining your your answers (especially those that combine a future WANT with an ABILITY e.g. let’s say that you’re good at sewing and want to do some writing, then you have the possibility of starting a writing/publishing career, perhaps starting with a blog on sewing.

That’s it.

If you can find your passion, then find a way to make money from it, well, you’re almost home!

Let me know what this simple exercise shows you?

You can be a millionaire in your lifetime …

Australia’s (now the world’s) richest woman is worth $25b or so …

… and, she says that you can be a millionaire:

There is no monopoly on becoming a millionaire.

If you’re jealous of those with more money, don’t just sit there and complain. Do something to make more money yourself – spend less time drinking or smoking and socialising and more time working. Become one of those people who work hard, invest and build and at the same time create employment and opportunities for others.

Of course, Gina Rinehart inherited one of the world’s biggest iron ore deposits …

… you and I have to find our own lump of wealth 😉

But, I agree with her sentiment: increase your income (“spend … more time working”) and put your money to work for you (“invest and build”).

If you do, getting to a million will be a snap:

If you start off earning $25,000 and work for 40 years (earning around $80k in your last pre-retirement year), and save just 10% of your annual salary (earning 8% on your money), you will have exactly $1,000,000.

Of course, you will be used to living on $72k p.a. ($80k less 10% for savings) by then, and $1m will ‘safely’ give you only half of that to live off … oh, and you can halve that twice again to allow for inflation, so you will really be retiring on the equivalent of $10k a year, today.

But, that’s not the point; the point is that you can be a millionaire in your lifetime …

Of course, getting to $7 million in your lifetime (let alone in 7 years) still won’t be a piece of cake!

But, that’s where this blog comes in 🙂

A financial path well-trodden?

A short while ago, I received an e-mail from a reader who said:

I’m on the same path as you once walked.  I have a small business that is making good money and just started into real estate.  So far I have 7-9 houses and I’m looking for my first commercial building.

Michael told be that he started a consulting company with his partner about 7 years ago, and ventured into real-estate investment after he realized how much hard work it was and how little the consulting business returned (Michael’s business only had $80k in the bank after 5 years of hard work). I guess that situation has finally improved …

Michael and his business partner stumbled onto the idea of real-estate investing when Michael realized that the one rental property that he had owned for years had halved in value!

For most people this would be a sign to run away from real-estate, instead Michael took the Warren Buffet line (“be fearful when others are greedy, and greedy when others are fearful”) and ran towards it …

… but, he quickly realized that he could find other houses that had halved in value since the ‘crash’ and maybe pick up some real bargains.

This is the sign of a true investor – Michael had found his niche.

He began by making a ‘low-ball offer’ that was “too low to accept” on one property … yet, it did get accepted and Michael had made his first (actually, second, since he still owned that rental) real-estate purchase.

Except that Michael forgot to mention the deal to his business partner; so, his next phone call to his business partner that went something like this: “I got this great idea!”

Fortunately, his business partner shared Michael’s vision, so that first purchase followed with a flurry of other purchases and after just one year they now own 8 single family rental houses!

I asked Michael to share with you how he invests in real-estate:

The residential real estate market has been a boom to investors.  It seems that everyone now is cashing in on the housing downturn.  Here is a breakdown of the steps that I use to determine which houses to invest in that will turn a profit; here are my basic criteria for a good rental house:

  • At least 1000 sq ft
  • 3 to 4 bedrooms (3 bedrooms that can easily be converted into a 4 bedroom house)
  • Garage (no one likes to park outside in the winter)
  • Split level house (this configuration tends to be popular with rentals in my area)
  • Decent sized yard
  • Has sold or been valued for at least 100k or greater in the last 10 years based on Zillow.com
  • Property taxes around 2k

I use Zillow and Home path to find properties in my desired zip code.  I run the available houses through my criteria and start to narrow them down.  I then will call up my realtor and set up appointments to look at the houses.  It honestly takes me about 2-3 minutes to walk though a house and figure out what the house is worth (to me), how much it will cost to fix it up and what it will rent for.

The houses that I typically buy are about 45k.  Some more, some less.  My target is to have no more than 65k in each house total.  That allows me to rent them between $945 and $1095 depending on the property.  I try and average at least $1000 in rent per property.  Once the house has been renovated I usually create 20-40k in instant equity.  Here is a real world break down of two houses that I have.  One was paid for with cash the other was purchased with a mortgage.

Cash property

  • Asking price: 35k
  • Purchase Price: 25k
  • Approx renovation total: 30k
  • Total investment: 55k




Property Taxes



Property Insurance






This house rents for $995 per month and the tenants pay all of the utilities.  I manage this property myself so there is no management fee and they deposit the rent directly into a bank account setup for that property.

The net income that I receive from that property is $818 per month [$995-$177] or $9821 per year (not deducting personal income tax).  This represents about 18% cash-on-cash return per year [$9821/$55,000].

Mortgage property

  • Asking price: 65k
  • Purchase Price: 47k
  • Approx renovation total: 15k
  • Total property cost: 62k
  • Mortgage: $32,830
  • Cash down payment: $12,713
  • Interest: 4.773%



Property Taxes



Property Insurance



Mortgage Payment






This house rents for $1095 per month and the tenants pay all of the utilities.  I manage this property myself so there is no management fee and they deposit the rent directly into a bank account setup for that property.

The net income that I receive from that property is $752 per month [$1095-$343] or $9020 per year (not deducting personal income tax).  This represents about 71% cash-on-cash return per year [$9020/$12,713].

I’m already acquiring equity in these properties at a deep discount.  In 5 years the gross rents will average close to 60k.  Again some more, some less.  At that point my plan is to sell all of these houses for an average of 100k (I have 8 houses) and cash out with about 2.5x my money invested.  Ideally it looks like this:

60k rents over 5 years + 100k selling price – 65k total purchase price.

Now I don’t get caught up in all of the cost of my time, turnover allowances or maintenance of the property arguments.  If you are busy constantly crunching those figures you have lost focus on the big picture.  In the end a few thousand one way or the other doesn’t make ANY difference.  Remember focus on the BIG PICTURE.  Spend money up front on quality renovations and tenants and these will be insignificant expenses in the end.

Michael says that his average cash-on-cash returns, even in the current market, average 20-22% which is outstanding. And, if the real-estate market recovers in the near future, he should expect a tidy capital appreciation, as well.

But, not one to rest on his laurels, Michael is currently negotiating to buy not one, but two multi-million dollar commercial properties:

 Today was the first day that I made an offer on a commercial property.  It is a type “A” building with a 10% cap rate.  I’m pretty excited.  Our real estate company is small but growing rapidly.  We have the down payment for the property which is priced at 4.25 million … I understand that 4.25 million is a big jump but the property will be professionally managed and cash flows very well.  We are contacting about 8 different commercial banks.  This will be a big step for our company.  We just have to have a bank take a chance on us.

Michael actually ended up negotiating a ‘smaller’ $2.8m commercial property that he is purchasing with $250k down and the owner carrying $250k, which would leave them with sufficient cash in the bank (~$500k) allowing Michael and his business partner to pick up another property at about $2.5million.

A $5m + property portfolio puts Michael and his partner into the ‘big league’ …

Now, it’s not the value of the portfolio that you own, but the cash that you can realize if you sold it all off (or, the net income that it generates) that determines how well-off you really are, but I’m guessing that it won’t be much longer before Michael and his business parter can write their own “how I made $7 million in 7 years blog”.

I like reader stories like these … good or bad, rich or poor, heep ’em coming 🙂