E17: How to Get 150% ROI by Renting by the Room with Ryan Chaw

There are many ways to make money from investing in real estate. One of these is renovating a large house strategically and renting rooms to multiple tenants.

In this episode of Passive Investing Show, the Founder of Newbie Real Estate Investing joins J to discuss reaping high returns by having multiple leases. Join them as they break down the process of property and tenant management and how to make money renting by the room.

Here are some power takeaways from today’s conversation:

• Consider renting by the room
• Look for a responsible tenant base
• Manage conflicts between tenants
• Make real estate management hands off
• Streamline your systems

Episode Highlights:

[01:16] Renting by the Room

Ryan bought his first house in Stockton, California, for $262,000. He targets large houses close to schools where he can add a fifth or sixth bedroom.

[09:00] His Tenant Base

Ryan targets high-end colleges with well-rounded and responsible professional students. Ensure doing multiple leases is legal in the area. In managing tenant conflicts, he sets house rules for them to follow and empowers them to have a discussion.

[16:29] Additional Expenses

There are little to no additional expenses from an insurance and utility perspective. From a maintenance perspective, Ryan tries to get the seller to pay for the capital expenditure parts. If not, he budgets at least 1% to 2% of the total house cost toward repairs. He informs tenants about the scheduling of upgrades.

[20:38] What the Turnover and Property Management Looks Like

Most tenants stay for over two years, while about 25% come through referrals. The last 10% come through advertising. With a student housing market, you can rent with no difficulty throughout the year.

[29:21] Finding Great Tenants and Streamlining the Maintenance Piece

He uses the PRIME Method for finding tenants. PRIME stands for: Placement of advertisements, Reviewing social media, Identifying the type of tenant, Measuring responsiveness, and Ensuring proof of income.

Notable Quotes from the Episode:

[01:56] “I knew if I could just start buying properties and planting seeds, it would grow into a forest and that I could retire early, have financial independence for myself and family, and be able to give back to my community later on as well.”

[20:04] “Real estate pays in four ways, right? Appreciation, equity pay down, tax benefits, and cash flow. For me, appreciation was the biggest gainer. I actually made about 50% return on my investment each year from the capital that I invested just through or mainly through appreciation.”

[34:59] “Real estate is like at least a 30% ROI game in the long run per year, so why not take advantage of it now and get started?”

Resources Mentioned:

Connect with Ryan: Instagram

Newbie Real Estate Investing FREE PDF Guide

GoBundance

Rich Dad Poor Dad

Rentometer

Zelle

Rent Ready

TenantCloud

The Passive Investing Show