Building a Rental Property Empire with Mark Ferguson
About Mark Ferguson
- Mark has been an investor since 2001.
- He owns 16 rental properties and runs a team that sells over 100 properties a year.
- Mark has a podcast called Invest for More.
Nuts and Bolts
Mark originally graduated with a finance degree however after being unable to find the right job in 2001 he started working in real estate with his father. It was while doing this job that he had his first encounter with flipping houses and he immediately fell in love. After he made some money he wanted to put it somewhere safe but he knew that the stock market wasn’t secure enough for savings, so he started investing in real estate instead. Since becoming an investor Mark has flipped over 100 houses, is the author of 4 books about rental properties and he started a blog in 2013 called Invest Four More. This blog grew into his books and into his real estate company that now employs 10 people full time. Mark attributes his team with the reason he’s able to achieve so much because through them he can delegate and share out the tasks.
One of Mark’s books is called “Build a Rental Property Empire” and in this episode he talks about the best ways to find a property that will yield continuous cash flow. The first thing to do is really know your market. If you’re an out of state investor then you can use investability.com or zillow.com to get market rental estimates. By knowing the market you can see when you’re paying too much for a property. Mark tries to buy property at 20%-30% below market price because you want to be cash flowing from day 1, not buying with the hope of cash flow in the future. When you have average rental rates you should figure out expenses and vacancy costs and this will show you if it’s worth buying the property. In some markets it’s just not worth buying rentals because the figures don’t make financial sense. Mark recommends that if you’re serious about becoming a real estate investor then you should apply for an agent’s license, because as an agent you’ll have firsthand knowledge of the market and what properties are coming up for sale. However, if you’re not an agent you can still find good deals by hiring an agent and seeing as many properties as possible.
Before you purchase a property Mark recommends that you do a walk through, or if you’re out of state find a third party that can do the walk-through for you. Look for rental increase opportunities, for example rooms in the basement that could be converted into bedrooms or bathrooms. Make sure you do any repairs or major maintenance before you start a lease and then the systems will last longer. Before buying look at the market differences in price on number of bedrooms when buying vs. renting. For example, it might make more sense to buy a 5 bed – even if you were looking for a 4 bed – because the extra room significantly increases the rental value. For out of state investors talk to local agents or property managers about what the local fashions and preferences, for example is there a fashionable style of counter top or cabinet that you should be putting into the property.
Mark advises that when you’re buying small rental properties in small markets, the bigger banks don’t want to work with you. In these cases Mark recommends finding small local banks to help with financing, start a relationship with them and they can help you build a rental empire. Mark has a local bank in Colorado that he works with, they have financed all 7 of his house flips and he has 15 rental mortgages with them. Mark notes that you should always factor expenses into your financial planning; single family homes generally require less investment than multifamily properties because they residents pay every utility and often look after the property as if it was their own. Also before purchase investigate the expenses and tax quirks in your state because each state has different rules. When calculating how much to charge in rent Mark aims for 1% of the total price of the property and property management should be at 8-10% of the gross income from rent.
One piece of advice – If you’re out of state be careful of turnkey companies – do your due diligence and have a 3rd party do a walk around or hire a home inspector. Get an agent to pull a value for you. The turnkey company might be reluctant for you to do this, but don’t be scared.
Top investing tips
- Most successful habit – Mark takes 10-15 minutes each day to write in his journal about what did that day, review goals and meditate. He also keeps his goals in view all day.
- Your long term goal – Owning100 single family rentals
- Most influential person – Mark’s father taught him to flip, and Jack Hanfield’s personal coaching programme which taught motivation, mindset, goal setting etc
- Most influential tool – His phone so that he can text the team and take pictures etc on the move.
Contact – blog investfourmore.com