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[00:00] Yeah, check this out. It's kind of a crazy story. >> How are you managing the tenants? >> We have had property managers since day one. >> Okay. >> Our job was to manage the managers and then again like admitted many mistakes.
[00:13] I was horrible at we fired the first five, right? We fired the first five property managers for lying or not expectations. So what we did is we ultimately got to a point where we were large enough to call the shot. So we have one point of contact at the property manager we've been with for 10
[00:27] years. We have a standing uh used to be Friday, now Thursday phone call. We go over the same numbers. I get a daily report of what's going on where I can ask questions daily. Uh so at this point, we're spending probably less than two hours a month kind of managing that. But it's because we've gone through the
[00:42] fire of, you know, working with the manager, setting expectations, and we're not adding units like we used to. >> Yeah. Any tenant horror stories? >> Oh, I have several. Um I can tell you the first tenant on Norris Drive almost killed us. first first property we bought. We're so excited. We took half
[00:59] our stack, 20 grand. We buy it. Tenant moves in. We do everything right. Credit check, reference check, income check, all of that. What we don't know is the family is going through marital strife. They break up, divorce the first month and weeks after moving in. She takes off. He is not happy with this. He
[01:19] decides to stop going to work. He decides to become near, as I can tell, a professional alcoholic and spends the next three months destroying our property. I'm in California, so it takes two to three months to get him out. Costs a,000 bucks to get him out. I'm I went from here. That's the problem right
[01:35] there is when you have all these properties, it's part of a problem in a state that is very tenant friendly. Like you you wouldn't have the same level of issue in Florida. It's a very uh landlord friendly state by comparison. >> Being excited to have my first rental to here again to your point after losing
[01:57] 80% of my stack. I'm ready to quit. I remember walking in and there I still can't get this out of my head. The sheetrock. He's got wine bottles, empty wine bottles stuck in my sheetrock. And I am ready to quit. I'm ready to sell it at a loss. Move on. I'm feeling
[02:14] like a loser. Olivia looks at me and goes, "Did we do anything wrong?" No, let's try one more time. And from there, nor stride, never disappointed. Next tenant never missed payment, you know, on onto that. But that almost killed us. >> The other horror story is we had >> Oh, I thought you meant kill like it
[02:31] actually. >> That's what I thought. I was like, did he come charging at you? No. My bad. Should have used a different word. >> Well, it almost killed us financially, that's for sure. Um, the other one, I call it the hammer story. So, this is
[02:45] probably 10 years in. A tenant comes in to pay rent cash. Um, we my property manager does their job. This person who's paying cash for the rent, not on the lease. We think it's a roommate situation, right? Okay, we allow that. Just fill out an app. We'll add you to it. We'll let you pay rent next time.
[03:04] Thankfully, they didn't take the payment. So, he fills out the app, brings it back, wants to pay rent again. My team does the right thing. Says, "No, we can't accept that till you're approved. You're accepted." Blah blah blah blah. Turns out the only thing accurate on the lease was his name.
[03:18] Everything else was wrong. Turns out the guy was a a drug dealer of some kind. He had scared the existing tenant out by threats. Yeah, this is gets crazy. Um, we tell him he has to get out, evict. He sends his buddies a text or an email or something, says, "Let's have a hammer party." We actually got copies of this
[03:36] after a fact. So all his boys come over, throw a raging party in my apartment complex, and decide to take hammers to every surface in my unit. Break the toilet, break the tub, break this, break that. Ends up, we call the cops, we end up taking like eight people to jail, including him. But, you know, I have a
[03:53] $20,000, you know, destroyed unit because of that. So, yeah, you know, people can be pretty mean. >> A hammer party. We should have one of those here, man. >> Yeah, [laughter] that's funny. >> That's pretty fun.
[04:04] >> Another crazy story. Uh, another horror story is having a property where there is a uh a cult animal sacrifice going on in the backyard uh every other week. Uh, man, the stories you have as a property manager and landlord. >> We could do the cyber hammer. Cyber hammer. True.
[04:23] >> Wow. Does insurance cover any of that or no? >> Uh, so I'm sure I could have filed insurance, but at the time we we were under the impression that if we did, all of our insurance would go up. We had not had a claim yet. So maybe this again is inexperience. So we we we paid for it
[04:36] all. We did, you know, we used it in the trial. He ended up going for jail for longer. So, but yeah, no, we paid for that $20,000. >> Oh my gosh. >> I feel like everyone's scared. >> And that's the same thing with section 8 properties, too, by the way. Um it's
[04:49] very hard to get number one the tenants, section 8 tenants, and section 8 themselves to help compensate for excessive damage at the end of a of a turn. So people are very gungho about section 8 rentals because they can pay up to 25% above fair market value according to their own
[05:07] numbers if you look at the zip code charts. But the problem is mostly when they're there for just one year because when when they're there for multiple periods of uh multiple years at a time all that kind of evens out to an average you know cost per year and maintenance and repairs and the turn itself can get
[05:25] kind of spread out over many years. But when you have a tenant who has been there for just one year and they they put $5,000 worth of damage into your property, it's pretty brutal because you have to do that and then if you get another tenant for another year and like because you don't know I mean in Florida
[05:41] you you can't really sign more than a one-year lease. You can do a two-year lease, but it's just not normal. It's not normal at all. And most people don't want to do that. makes it a little bit difficult to uh I don't know predict what your financial outcome is going to be over the course of five years with uh
[06:00] some of these section 8 properties >> about making an insurance claim because then their premiums are going to go up. What's been your experience with that? >> So I've actually had three disasters. So I had two fires in a flood um two total losses and one partial loss and surprisingly u first off the insurance
[06:16] policy is a lot easier than I thought. So, the first one on college, uh, I get a phone call from my property manager. His name is Brad. Says, "Hey, uh, your duplex is on fire on college. It's likely a total loss." Um, so what happened there? Uh, a homeless person was camping under the carport. Lit a
[06:33] fire to stay warm. Caught the carport, caught the tree, caught the house. Thankfully, no loss of life, just destroyed. Called my insurance company, you know, filed a claim. I had a check in 3 weeks. I was shocked. I I I didn't know how fast it would be, so I had to check. We ended up scraping the lot and
[06:49] selling the lot and we came out ahead. Um, we had two more, one on Diana, one on Terrace, but my insurance actually did not go up as, you know, much as I feared. It went up a little bit. Um, but now every time I fill out a new form, I have to say I've had claims, so that may impact stuff. But
[07:05] >> it'd be interesting to know like the lifetime return of something like that. >> It would I've actually toyed with the idea of calculating all my insurance premiums versus what I've received in those three claims. It's probably pretty close to even at this point, >> but you're getting your money back then
[07:20] rather than, you know, over time, which is more valuable, >> right? Correct. Yeah. >> It is so fascinating. It kind of is frustrating to know that insurance. It's like, what am I even paying for at the end of the day? You know what I mean? >> I heard a story. It was on Twitter. Uh
[07:31] the term is >> Yeah. More and more people when they're paying with cash, they're not ecstatic to pay for insurance. they would rather withhold far more in the reserves and come out of pocket for many of the repairs when disasters strike. Um, at least down here in Florida, it's just
[07:50] it's become too much of a hassle to try to get the money back from insurance that you're paying into every single month, year over year over year. If you look at how much money you're saving on some of these large properties and even even just a single family house, I mean, hardly anybody ever
[08:08] files a claim anyway. I mean, I guess this guy did three, but I don't know. Just you think it'd be easier to to to get money back from insurance, >> raw dogging it right now in real estate that people are going without insurance, >> self-insured, it's called. I >> I would never do that. So, really what
[08:27] they're talking about is they still have likely still have liability insurance, but they're not taking the structure or total loss on it. So, they're basically saying if it gets sued for liability, they're likely covered. I would not raw dog without that. But if you want to be self-insured and you you have a big
[08:40] enough checkbook you can write the check to rebuild, go nuts. I'll never do that. I I I like I like being able to call my insurance company and say, "Hey, my unit burned down. Either build it back or cut me a check." >> Yeah. >> Yeah. And then wait like six months for
[08:53] that to >> I mean then you're dealing with permitting and code and all that and it extends it even further. >> For me, it's the peace of mind because I looked at the cost of earthquake insurance versus the cost of retrofitting the foundation. Um, and I
[09:07] look at that and I think, well, the financially smart move would be to probably retrofit the foundation. The chance of an 8.0 earthquake in Los Angeles. Like, you do all the math and you're thinking if I'm sitting, you know, $2,000, uh, you know, a year and extrapolate that over the next 30 years,
[09:21] I don't know. Uh, for me, it's the peace of mind knowing just if something happens, I would rather have it than not. Like just in case. >> No, I I I think that's wise in areas that have earthquake prone like LA or San Francisco, I think it makes sense. Thankfully, Fresno, where again, where
[09:36] I'm at, where I've only ever been, um, is some of the most stable earth in California, right? It's the it's the farmland. Uh, so I don't have earthquake insurance, knock on wood, in in Fresno. Yeah. >> Now, this might be another like noob question, but I've always wondered if
[09:48] you end up getting earth insurance and there's an 8.0 in Los Angeles, let's say a lot of people have, you know, the same insurance companies, how is one of those companies going to be able to pay for the flattening of like thousands of homes? >> I think it's it's something called
[10:02] reinsurance. I think a lot of insurance companies have reinsurance. >> They buy insurance. Okay. From like what funds or something? >> Well, Buffett's Buffett's big business is reinsurance. >> Interesting. >> Yeah. Yeah. That's what I think.
[10:12] >> You think he has enough money just in case something happens? I mean, >> I would [laughter] hope so. I don't know for sure, though. >> Just wanted to expand real quickly before we we close out here um off of the poly market video that I did the other day. Zoran Mandani is uh we're
[10:26] going to look at some of these these uh bets here. There's one right there, but sometimes there's multiple ones. So, how do you spell this guy's name? So, [sighs and snorts] margin of victory. Margin of victory. Percent of vote. Let's look for some of the highest uh
[10:52] volume bets. Wow. 92% chance of victory. They're just betting on how how how much of a victory. Let's go back up here to margin of victory
[11:22] by 10 to 20% is what is ex what's betted on. Wow. And then there's another interesting thing. We heard that u red share said there will likely not be another rate cut in December. But if you look here, it's like somebody
[11:45] might know something. It's gone down. It was a 90% expectation and now it's a 67%. So I don't know. Does somebody know something?
