Marc Nilson has over 20 years experience in real estate, particularly focusing on college rentals around Gonzaga University. We discuss our journey of building wealth through strategic investments, the importance of cash flow, and the dynamics of managing college tenants.
Our conversation also highlights the challenges of turnover and maintenance, lessons learned from past mistakes, and advice for new investors looking to enter the college housing market.
“Cash flow is the foundation of real estate.”
Marc nilson
Key Takeaways:
- The journey of building wealth through real estate is a long-term commitment.
- Choosing the right market, like Gonzaga, can lead to successful investments.
- Utilizing owner-occupied financing can help new investors get started.
- Cash flow is a critical factor in real estate investment decisions.
- The price per bedroom significantly impacts rental income in college housing.
- College tenants can be reliable and responsible, contrary to common beliefs.
- Understanding the timing of student leases can minimize vacancy rates.
- Managing turnover effectively is crucial for maintaining cash flow.
- Learning from past mistakes is essential for future success in real estate.
- Discipline in holding onto properties can lead to greater long-term wealth.
Full Transcription:
Speaker 2 (Mike Nilson) (00:00)
Marc, welcome to the compound commitment. How we doing?
Speaker 1 (Marc Nilson) (00:04)
Great, so fun to be doing this with you.
Speaker 2 (00:06)
I’m really excited for the listeners to see how confused they are when they hear my voice ask a question and then hear some of that sounds just like me answer the question.
Speaker 1 (00:16)
It is gonna be fun.
Speaker 2 (00:18)
Hey, well, I’m really excited because this is not only about real estate, but this is really about our journey over the last 20 plus years of you and I being able to think of, man, how do we do something together? How do we build wealth? How do we have fun? And it turned into buying 25 plus Gonzaga rentals. And so I wanted to go back and just talk about college rentals. I have a lot of people when they find out that I own rentals ask me questions. How is it different than owning multifamily or even single-family houses in other parts of town. And I thought we’d just go back and go through our last 25 years. So I’d love for you to take us back to the beginning. Why Gonzaga? Why college rentals? Tell me about our first deal. What do remember?
Speaker 1 (01:02)
Yeah, well, think initially we weren’t even looking in the guns egg area. We were looking at the cheapest houses we can find. And I don’t know if you remember driving through those neighborhoods, but, what happened with, at least with me was I had been shopping around with a few different realtors and just by chance, I called someone on a sign and it was a triplex for $63,000 on the Northwest side. And kind of every realtor I’ve been working with when I’d walk through a property, they would say,
Yeah, it’s a good deal. think you should buy it. And this gentleman that walked me through his name is Brian Casbar. I had asked him, what do you think? And he said, Hey, honestly, I think you’d make money, but I don’t think you should buy it. I said, well, what do you mean? So, you know, it’s just your first one has got to be something that you enjoy. It’s got to be something that makes you money and this property in this shape and this area isn’t going to be as good. Can you be patient? Can you let me find you the right house? And at that time,
I think you had just gotten your first deal under contract, which was in Gonzaga. I kind of fell into the Gonzaga area, I think, just because of your relationship there. But that’s where the next several properties that I bought were and that you bought were in. So maybe call it dumb luck that we didn’t start in a different area.
Speaker 2 (02:17)
me, I don’t know if it was dumb luck, I’d really say it was my wife Rhiannon because at the time you and I, we were part of this, what was it called? Robert Allen, it was the Enlightened Millionaire Institute and everything I was studying was about buying multi-family houses and so I was convinced that was the way and Rhiannon kept poking at me, gosh, I think we should get in the Gonzaga area, that just seems like such a no-brainer and I kept telling her,
Speaker 1 (02:24)
Robert Allen.
Speaker 2 (02:43)
I’ve done all the studying, you don’t know what you’re talking about. We definitely want to get into some kind of multi-family. And we were going in some rough neighborhoods and I remember taking her to a place that was a little sketch and walking through and I could see the tears welling up in her eyes and she’s like, you trying to tell me that we’re going to live here? Because at the time I was saying we’re not going to buy a house to live in, we’re going to buy a fourplex. And she really just kept dragging her feet. She did not want to live in a rougher neighborhood and so…
when we finally came around to the idea of Gonzaga Houses. Then I know she was in and we ended up buying that fourplex right on Indiana. There was only one livable unit. So Rhian and I moved into that unit and we fixed up the other three. And so that’s how we got into it. But I remember your first deal. Did you actually buy a house with Brian Swanson?
Speaker 1 (03:30)
No, no, he didn’t come up until my third house and I was telling him, Hey, the numbers are really good in real estate. Cause he had started investing over on the West side and he had bought a triplex before you and I did. And I was telling him, Hey, the numbers here are good. And so finally recruited him over, but no, we didn’t end up buying any real estate together.
Speaker 2 (03:49)
I remember you were living in a house that you had bought and he came in and lived with you. We guys fixed it up. And then I remember him buying a house and you guys moving in together while you guys fixed it up.
Speaker 1 (03:59)
Yeah, and I think that’s something that a lot of people ask me like, hey, how do I get started? What’s the best way to do this? And, you know, now that I’ve got a family, wife and kids and all that, I don’t get to do this anymore. But what we did when you buy a house, you can purchase it owner occupied, which means as long as you move in there and it’s your house where you can buy zero down, you get the best interest rate. And so like whether you buy a four unit like you and you can live with one of the units or you buy a regular house.
So that’s what we did is I purchased a house owner occupied and started fixing that up. And then when people are saying, how do I do this? Well, that first one for me as a no brainer, as a young investor is utilize that owner occupied financing. So that’s what we did. I buy a house and we’d move in and fix it up and be doing dishes in the bathtub while we’re renovating the kitchen. And then he’d buy another house and we’d go live in his place and fix that up too.
Speaker 2 (04:56)
People always ask me, how do you get so many houses? And it was doing things like that, not just with the fourplex, but then when it came time to buy another house, we found a house that was about four blocks away from Gonzaga. And same thing, we could get owner occupied financing if we moved into it. So Rihanna and I lived on a house on Nora for a couple of years as we were building up our real estate portfolio. And it hurt at the time because all of our friends were living in really nice houses on the South Hill. But I love that idea of
taking the non-traditional route. Dave Ramsey always says, live like no one else, so later you can live like no one else. And I think that path that you and Swanny took was really cool to see how doing dishes in the bathtub is not something that’s really glorious or glamorous, but it definitely pays off in the long run. So now we’re over 20 years into this thing. I’d love to have you look back and say, why college housing? What are some of the pros? What are some of the things if someone’s gonna ask you,
What kind of real estate should I get into? How would you sell them on college housing?
Speaker 1 (05:58)
Yeah, I think that the real estate market moves at different times. So sometimes I really do think multifamily is the right investment. And sometimes not sometimes like over the past few years, I feel like it’s been overpriced. And same thing with the Gonzaga areas. I feel like you and I got in at such a good time. I mean, we were able to buy houses zero down and immediately start cash flowing on them. And so I remember
going something doesn’t feel right. How come this is so easy? so I do think right now we’re starting to get back into where maybe that Gonzaga area makes sense over the last few years. It’s been a lot tougher cashflow wise. So when we look at real estate investment, I know that you think the same way I do, which is kind of our foundation, how we look at real estate is Robert Kiyosaki and the basic idea of cashflow.
And so to answer your question in regards to the Gonzaga area, I think when you can buy a property that cash flows, the upside is the future growth or is the area growing as it getting better, which I think Gonzaga will continue to do so. So I like it for that reason, but to be honest with you, I don’t think Gonzaga area is always the best place to buy. It’s more timing in that area for me.
Speaker 2 (07:20)
What’s the difference between Gonzaga real estate and Eastern real estate versus Whitworth real estate? And could this template work in other cities?
Speaker 1 (07:28)
I haven’t invested in other college. I mean, we have a lot of these little colleges around our town, but I haven’t invested in say Eastern or Whitworth. But I know that some of the guys that I work with that do invest in the Gonzaga area, they feel like it’s a really a cut and paste into the other college areas as well. But I can’t speak directly to how Eastern is different than the Gonzaga area.
Speaker 2 (07:53)
But let’s start from the beginning. You have a client that really wants to be able to buy real estate and is interested in this college housing model. What do you look for when you’re looking at houses near campus?
Speaker 1 (08:05)
For me, and I think for most of my clients, it all comes down to cash flow. And then we’re going to look at that from a lot of different angles. part of that is the purchase price of the property versus how many bedrooms there are. And then can we add any bedrooms? Because typically in the college area, people are going to be willing to pay a certain dollar per bedroom based on proximity to campus and the overall condition and functionality of the house.
That would be where we typically start. Is this going to cash flow if we purchase it? And then how much money do we need to put into it to get it to that point? Because sometimes the answer is yes, it will, but it’ll be a significant hunt because we have to do a full on renovation in the basement to add some bedrooms and cut any gross windows and things like that. Those are all out of pocket cash expenses versus somebody being able to buy something with a lower amount down where they don’t need to do.
those renovation things, they might be sacrificing a little bit of cashflow on that purchase because they don’t have that pocket money to do it after they purchase it.
Speaker 2 (09:09)
Is your criteria any different when you’re looking at a single-family residential house in a different part of town? Is it all about cash flow or are there different things that should be taken into consideration when looking at college rentals?
Speaker 1 (09:21)
It’s much like other areas. You’re going to sacrifice your financials. You’re going to have less cash flow and you’re going to need to put in more work on a property the closer you are to campus or the nicer the house it is, the less cash flow that you’re going to have. It’s the same thing as if you’re buying a rental property in an exclusive high end residential area, typically you’re not going to have cash flow. You’re going to have a very small amount of cash flow. So I would say in that manner, it’s very similar.
But again, just going back to if we’re looking outside of a college area, it’s really hard to increase the rents. You might be able to add a carport or you might be able to spruce up the property a little bit, but it’s not as direct of a correlation. It has been for us pretty simple math where you go, if I fix this up a little bit and I add another bedroom, we can guess really close to how much that’s going to increase our rents.
Speaker 2 (10:15)
That’s what I’ve noticed too, not that I have a whole lot of experience outside the Gonzaga area, but it really seems like the price per bedroom is such a huge driving factor in college rentals. Because if you have a three bedroom house and everyone’s paying $400 a room, and you can finish off a basement and put three more bedrooms in here, then you get three bedrooms times $400 more a month. And it seems like your ability to raise rents by adding bedrooms is way more powerful when you’re near campus.
Speaker 1 (10:43)
Yeah, I certainly think so. And there’s almost a direct correlation there. Like, for example, if you have a two or three bedroom house, you’re actually going to get a lot more per room for that two or three bedroom house.
Speaker 2 (10:55)
One of the big concerns that people have is all this sounds great, but the more bedrooms you have, the more college tennis you have, and aren’t college tennis really hard on properties?
Speaker 1 (11:05)
Yeah, sometimes, you know, and I would say it’s pretty hard to tell some of my best tenants I was a little nervous of, you know, we had a guy with the Mohawk and tattoos and piercings all over and he’s probably my best tenant I’ve ever had. He’s so proactive and so nice and always paid rent early. so in that aspect, it is a little bit hard to tell. That is one thing that is great about being in the Gonzaga areas. Typically for us, the
Gonzaga students are paying quite a bit of money. So there is not as much of a crapshoot as if you’re in like a regular residential area where I have rented some houses to people that weren’t students and that’s gone good and bad. But most of my experiences have actually been bad. So for that reason, I do like the Gonzaga area. And just like if you did Eastern or especially Whitworth or something like that, you know, you’re getting someone who’s coming from a pretty quality family or is not maybe working the system where I have had that happen.
people intentionally write bad checks and balance and you got to do the whole eviction process. I don’t think you and I have ever had to do that. I’ve had to do it twice when I did not rent the students.
Speaker 2 (12:15)
I’ve actually had a great experience with students. You’re not going to have anyone starting any kind of drug lab in your house, most likely. The other thing is that you’re going to sign those leases almost a full year in advance. I have freshmen in college right now emailing me about renting a house for their junior year. And so just the stability has been so nice, especially if you have someone that’s wanting to rent a house a year in advance. They’re probably a little bit more responsible than the average tenant.
Speaker 1 (12:45)
Yeah, that is nice being able to kind of pre plan. And so for me, typically, if I’m proactive and doing the right thing, it’s it’s November that I’m reaching out to my tenants and saying, Hey, are you guys staying another year? Or should I start looking? And that seems to be when all this college students start looking to is November, December, and even I know for you, you feel about being a little earlier. But yeah, so nice to have that heads up. They’ve already made that plan before they go home for winter break.
on where they’re going to be living next year.
Speaker 2 (13:16)
Just for some comparison, what does the average rental house look like? If any other part of town, when are people looking to renew their leases? What’s the typical vacancy rate in other places outside of the college area?
Speaker 1 (13:29)
You know, I don’t know exactly our good friend Brian that I was chatting with about a month ago in regards to Spokane’s vacancy rates. And I think he had said that we’re roughly 8%. So that’s fairly high for Spokane. And if we go back just a few years ago, I think it was closer to 1%. I know we had near a zero vacancy. Everything was full. And that’s really what drove these rent prices up so high.
So, you know, I don’t think that the Gonzaga area did the same thing. think our rents stay pretty steady, regardless of what the other areas are doing. But that being said, I do know a few guys who raised the rents quite a bit, but some of those guys now have vacancies.
Speaker 2 (14:10)
But to me, that seems like one of the key pros for having Gonzaga Rentals or college rentals is just the timing of the students to know that people are going to be graduating in May and so their lease is going to be up and I can be so proactive about moving someone in June 1st. So for over 10 years, I had a 0 % vacancy rate on all my properties. And I didn’t really even realize how great that was until I had a vacancy that lasted a full year.
because one of the downsides is if you don’t get the Gonzaga students or the college students in, it’s really hard to get someone to move in in October or November. And so mine ended up being vacant throughout the whole year and that just totally killed all that cash flow that had built up over the course of years and years to have a house vacant for 12 months. Absolutely just crushed me.
Speaker 1 (14:59)
Yeah, and I’ve gone through the same thing where I had some students that had committed to move into a property and were dragging their feet on signing the lease. And I was not proactive enough to follow up with them. Anyway, long story short, they said, hey, sorry, we already signed a lease someplace else. I advertised on Craigslist and ended up renting to some individuals that were outside of the school. that was…
one of the worst experiences that I’ve had because I gave them a chance. had bad credit, but they were getting their life straight. And I wanted to give them a chance to get back in. And that was when I had to the sheriff come help me ask them to leave after they destroyed the house.
Speaker 2 (15:39)
Yeah, that’s really painful. You can’t appreciate great tenants fully until you have an experience like that. What are some of biggest surprises or lessons learned about managing college rentals?
Speaker 1 (15:51)
You know, I think that part of this goes back to your question about how our college students and how do you know? Sometimes you don’t know, but for me, I like to usually when a house is vacant, I’ll show it to multiple groups over a period of one or two days. So usually on a weekend, I’m going to try and get three or four groups through that are interested. And if out of those three or four groups, I have two or three that are saying, yes, I’m interested in the house. I normally am just going to pick the ones that felt the nicest, that were the most friendly.
Easiest to talk with because that for me peace of mind having tenants that are enjoyable that are grateful That’s the biggest factor and real estate is just day-to-day happiness because I manage my own property. So
Speaker 2 (16:35)
One of the funny things that I’ve learned is I thought early on that, if I want my house to be really clean and taken care of, you get female tenants because they’re going to be more cleanly than the male tenants. And what I found is there’s really no correlation. We’ve had really clean male tenants and clean female tenants and vice versa. It’s really hard to judge a book by its cover. I think you kind of have crap shoot on that one.
Speaker 1 (16:58)
Yeah, I think so too. That’s where I go back to just, I mean, I know you asked like, what a surprise, what’s something important for me that’s at the top of the list of what’s important is if I have good tenants that are really nice, my life is good. If I have a tenant that’s just unappreciative and complaining all the time, even if all the time is once every other month, it’s like this huge burden, this huge weight. So I would say part of that is being proactive when you’re seeking the rentals is
Make sure you get great pictures. Make sure you post it on a bunch of different sites. have, you know, Craigslist and Zillow and then also Gonzaga’s got their own site. So we do all of that. And then I try and get as many throughout one time. So I get to pick. So I’m not just like, I only got one person that’s interested now. That’s, that’s my only option. I it’s so nice if you get three or four groups through and one of the groups is really excited about the house and you can tell that they’re going to be really cool tenants. And that’s the way to do it.
Speaker 2 (17:53)
I would totally agree with that. know, as I’m kind of thinking about some of the pros and cons of college housing, we’d already talked about the 0 % vacancy or just the understanding of the cycles and people graduated a certain time and they move in at a certain time and so you can really schedule it. That’s one of the biggest pros. But on the same time, it’s also one of the biggest cons because that turnover is so tight when people moving out in mid-May and then people moving in June 1st.
And the maintenance is so challenging, how to get carpets cleaned and paints and some of the deferred maintenance that happens when you have houses that have been filled for years and years and years. How do you handle that turnover season? Are there any hacks or anything you’ve learned to make it smoother?
Speaker 1 (18:36)
Actually, this year, I just started something new. So Gonzaga doesn’t go all the way to the end of May. And so I just actually learned this from your property manager was saying that they, do half of the month of May, pay for half and then they move out and that gives them time for that turnover. Cause you know, for the last 20 years, you and I, we give the tenants a heads up, we ask them to have it clean. They swear up and down that they’re, they’re going to scrub it. It’s going to be clean. then
I’m checking in the day before and they’re still on schedule, but come 10 o’clock that night, they still haven’t moved anything. They haven’t started cleaning and it’s always such a stressful time, especially when you have multiple that are doing the same thing. So I’m pretty excited for that. I’m going to sacrifice half a month’s rent to have that peace of mind, to go back in and do those maintenance items so they don’t get away from us. So yeah, I’m excited for that hack, but yeah, over the last 20 years, it’s just been an extremely stressful three or four days because usually new tenants are moving in and I’m trying to get back in there to fix and clean whatever needs to be done.
Speaker 2 (19:41)
And how do you handle the summer? Do most of your tenants sign a lease and pay for rent over the summer? Do they live in the house during the summer?
Speaker 1 (19:48)
All of my rentals, and I think you did the same thing, they’re all 12-month leases. So they go from June 1st to May 31st, but now we’re doing until May 15th. But yeah, so we do that full year round. And then typically I would say half of the students actually stay here in the summer. So usually if it’s a three or four bedroom, we might have two or three that stay and then a lot of times they’ll sublease. So they’ll have a friend that lives there in their stay for the summertime.
Speaker 2 (20:16)
So you’ve owned several college rentals yourself. How do you decide what properties that you hold on to and then which ones to sell or flip?
Speaker 1 (20:25)
think hindsight looking back, all things being perfect, would say, gosh, I would have never sold any of them. I would have hired a good property manager to take care of them all. But sometimes things aren’t perfect. And like for me, I wanted to free up some cash to do some other things. So for me, that was determining factor. had some equity in some properties that were pretty desirable and put those on.
What I thought was toward the peak of the market and turns out the market kept going up, but I did okay on those.
Speaker 2 (20:57)
And you’re actually helping me right now with selling some of my properties. And I think early on, I would never wanted to sell a house. To me, it was like the idea of killing the golden goose. But looking back as I drive past some of the properties I’ve sold in the Jiu area, I’m actually super thankful because although it did kill some cash flow, it allowed me to be able to do some other cool things, which would be build our new house or my wife really encouraged me to be able to build a pool now. And I thought I want to have a pool one day for our kids.
It was always going to be five or 10 years down the road. And she finally said, well, Mike, who cares if you have a pool when the kids are out of the house? Like we want to have a pool when the kids can use it. And so most of the times when Rihanna and I argue about things, usually I hindsight’s 2020 and I realized that she was right. She was right to get into the Gonzaga market. And she was also right to sell the houses because now when I drive past those houses that we sold, I’m so thankful that we had them for that time period. And it also allowed me to be able to do other things in my life.
Speaker 1 (21:55)
And I think maybe the answer to your question in regards to that is I think on paper, like Warren Buffett says, the secret to success is to buy low. And it’s not to buy low, sell high, it’s just to buy low. But that’s just on paper. So I do think that there’s other factors, just like you said, like freeing up some cash to do other projects or to go on vacation or, you know, actually realize some of those funds. But I think on paper, the answer is you probably never sell in reality.
If you got one that’s a little harder to rent, sometimes that’s the one there or to lease out. Sometimes that’s the one that you get rid of. Sometimes if you’ve got really good tenants in there or someone that’s paying a premium and you got really high rents, there’s a direct correlation to that and how much you can get for it. So sometimes when you’ve got those really high rents, that’s actually the time to sell.
Speaker 2 (22:44)
So Marc, we’ve talked about how college houses are awesome because you get a really low vacancy rate. You’re able to project when people are moving out and be able to sign leases eight, 10 months in advance. They’re leased out through the summer. They’re pretty high quality tenants. But now we have someone saying, I want to get into it. What are some of the common mistakes that new investors might make when they want to get into college housing?
Speaker 1 (23:08)
Anybody that’s talking about getting started in real estate investing, I always go back to have you read Rich Dad, Poor Dad, and as silly as that sounds, I don’t think that we were taught finance is the same way that Robert Kiyosaki does in that book. And it’s just so simple. The idea of if you buy a property that has negative cashflow, how many can you afford to purchase versus if you buy something with positive cashflow, how many can you afford to purchase?
And I think the idea of just running the finances, looking at those numbers, connecting with a good realtor, which I would be happy to help anybody, of course, going through and looking at this property, here’s the finances on this and here’s how much you’ll be positive or negative cash flow. And we’ve got time. So a lot of times there’ll be five or six houses in the Gonzaga area that I might be showing clients or sending them.
And I’ll say, don’t think these are the right ones. So just be patient, wait for the right one because that first one is what is going to catapult your real estate career and it’s going to make it fun and it’s going to make it profitable and you’re going to be glad you did it versus that first one. If you get it wrong, it can be painful and it’ll, it’ll stop you from moving on to the next one.
Speaker 2 (24:26)
That was the exact same advice I got when I first started my journey of looking at buying a fourplex. And I, of course, was looking at some of the rougher neighborhoods and Rhiannon just flat out would not let us do it, which I’m so thankful for. But then I found some other fourplexes in better areas and this mentor that was helping me out named Pat Delaney, he kept saying, man, you got to nail the first one. The first one has got to be good experience because if it’s not, it’s going to sour you. It takes a long time to be able to climb out from the hole that you dig yourself into.
And finding that fourplex just blocks away from Gunzeg, it was, I think it was $137,000. And, you know, up until that point, I just was not sure. Every house I looked at, it was like, I’m not sure, I’m not sure. And we looked at so many that by the time we found the one that was on Indiana, it was like, this is it. And it felt so good to go in with 100 % confidence versus I think if I didn’t have a mentor, someone helping me out, I probably just would have bit on the very first one I looked at because I was just so excited and I knew I wanted to get into real estate. So I love that idea. If you have time, make sure that first one is the right one.
Speaker 1 (25:32)
think so too. I love like, we’ve talked about this in other areas where you’re like, hey, let’s do it as fast as we can. Let’s do it right now as fast as we can. And that doesn’t mean buy something right now. means let’s start understanding the finances as fast as we can. Let’s get with the lenders as fast as we can. Cause although those pieces don’t move and it was actually, I don’t know if you know this, tomorrow is our anniversary. It was 21 years ago, 22 years ago that you and I sat down at Red Robin and we wrote our goals and said, Hey, then 12 months from now, we’re going to purchase our first property. And I think you did it in like 10 months and I did it 14 months or something like that. having that deadline was so helpful because it, made it real. made it, Hey, do we buy this one? Do we understand the numbers on it? And really just going through over and over and over when you get to that point in you.
You’ve seen the numbers enough, you know whether it’s a good deal or not.
Speaker 2 (26:30)
the listeners out here, please know that I’m the big dork that writes down goals on my bathroom mirror in maybe 21, 22 years ago. Every April 15th, Mark and I go to Red Robin for our anniversary where he was living in Seattle and he came over and was visiting me in Spokane and we said, hey, we’re going to get into real estate together. And we had these little Red Robin napkins and we wrote down goals on the napkins. And I just think there’s so much power in starting strong, being inspired.
creating everything in life twice. One time you create it in your mind and put it down on paper. And once you do that, think the likelihood of it happening just exponentially increases. so, yeah, that’s pretty fun that tomorrow’s our 22 year anniversary, something like that. One of the things Mark that I’m gonna brag about you a little bit is because when I first started before that you had came over, we were working with other real estate agents who are great, really nice people.
Speaker 1 (27:13)
22, I think.
Speaker 2 (27:25)
but they were not landlords themselves, they were not investors themselves. And so when we were looking at houses, they were looking at it like they were doing it for a first time home buyer that was gonna live in the house and not use it as an actual piece of cashflow in real estate. And I think one of the cool things that happened really early on was after working with these agents, realizing that, you know, maybe they weren’t the best fit for us. And so you immediately started studying to get your real estate license and you’ve helped me buy over 20 something properties. And so I think having that
experience is crucial. So for anyone, I know most people listening are not going to be in Spokane and won’t be able to use you, but what’s some advice you have to people that are looking to get a real estate agent and buy a college house?
Speaker 1 (28:06)
Different realtors have different investment strategies or they look at things different. I would say one of the biggest ones is know what your own investment strategy is, know what your own goals are. I again would go back to this, the simple idea of rich dad, poor dad, and just really understanding that at your core and then finding a realtor who understands it as well, because most realtors don’t, most realtors will say, yeah, I,
I think cashflow is a really good idea, but that’s not really doable in this market right now. And so why don’t we look at these other ones that don’t cashflow? And I would say just hold tight, don’t be in a rush, get recommendations from friends and family about other realtors and why they like them. For me, I feel like the biggest part of my job is oftentimes not finding a property and selling it to a client. It’s talking them out of deals and
pointing out the negatives. So that way when we do find one and I do say I like this place and here’s why, it makes it a lot easier decision for them.
Speaker 2 (29:08)
What’s your take on the Spokane market, specifically college housing market right now?
Speaker 1 (29:13)
Big question. I don’t know what’s going to happen with the economy. One thing I really do like if you’re in a town like Spokane where you’ve got Gonzaga, the likelihood of that market drying up is really slim. Now our challenge right now is that we’ve got some developers that are building apartments in there. So our vacancy is a little bit of a challenge right now where things are shifting, but the school is still growing. So think you can plan a little bit ahead on that, but that is one reason why I like the college market, is you’ve kind of got this built in, especially if you’re really close to campus, you’ve got this built in clientele and that market doesn’t fluctuate as much as if you’re just a mile away outside of the college area.
Speaker 2 (30:00)
And we know you’re an expert in college housing, Gonzaga housing specifically. But now your new venture, I know you’ve been talking a lot about exploring developments. Tell me what excites you about this side of real estate.
Speaker 1 (30:12)
For me, that’s a little bit more on the creative side. So I think my wife’s an interior designer. She’s really talented. And it’s a dream of ours both is to buy some land and create a community with some cool architecture that’s affordable. So I think that that’s just like you like writing down your goals and someday achieve them, creating that reality. That’s been something for Chelsea and I to be saying, Hey, I think this is the next venture in our life. So, you know, remodeling, flipping houses, that’s really fun.
And I have not built a spec house before, but I’ve got a couple of really good friends who do that and who have been kind of pulling me along saying, okay, let’s do it. Let’s do it. So I’m really excited for that. Partially for the creativity. And then it’s also a little more scalable, meaning, you know, if you’re buying say properties to renovate and sell, that’s a little bit of a challenge right now. That market’s really flooded. We’ve got a lot of people that are working on really slim margins and
It’s not as scalable. I just can’t locate as many properties that I want to purchase to renovate. Whereas if you’re building, you get to create it.
Speaker 2 (31:17)
Okay, last question. Advice to your younger self. So if you can go back 20 plus years ago when we started, what would you tell yourself?
Speaker 1 (31:27)
Discipline, I think, tightening the belt and leaving the equity in the properties. That was one thing I wish maybe I would have held on to more of them, not sold as many of them or refinanced as many of them to sustain my lifestyle. should have been making money at my job and holding my wealth in real estate versus using real estate as an income.
Speaker 2 (31:49)
and any advice you have to a young investor now that wants to be able to get into college housing.
Speaker 1 (31:55)
Yeah, I love the idea of if you can buy one owner occupied, move in there and fix it up and then plan on keeping that. think the first house you should buy should be one that’s going to cashflow as a rental, whether it’s whether you’re planning on doing that in six months or in six years. think thinking of it as a future rental is a really good idea. So looking at the future potential for cashflow on the first place that you buy, I think would be it.
Speaker 2 (32:22)
Sound advice. Marc, I love you so much. Thanks for taking all this time to share your experience with College Housing and Gonzaga Rentals. It’s been the time of my life doing it with you.
Speaker 1 (32:32)
So fun. Love you, buddy