Distant Management: How to Successfully Run Rentals Remotely

Dylan Silver (00:00.93)
Hey folks, welcome back to the show. I’m your host, Dylan Silver. And today on the show I have Adam Austin, real estate investor, entrepreneur, agent, CPA, Airbnb, rental host, operator, and flipper out of Kansas City, Missouri. Adam, welcome to the show.

Adam (00:22.308)
Hi, glad to be here. Thank you for having me.

Dylan Silver (00:26.028)
Absolutely. I always like to start off at the top of these shows by asking guests how they got into the real estate space.

Adam (00:35.738)
I’m one of those guys that when you listen to Bigger Pockets, you hear about them in other podcasts. had a house in 2007. I had just bought my job, transferred me to Mississippi. We were going to try to sell it. real estate agent came in and said, not only are you going to probably have to put $30,000 into this place, but you’re also going to have to

come up with money at closing too, because you owe way more on it than you’re going to get out of it. So was one of those things, well, I didn’t have 50, $60,000 just lying around to fix the house and to sell it. So we just kept it. rented it, moved to Mississippi, and that’s kind how the whole thing started. And then I also had just a small condo that

Dylan Silver (01:09.23)
Mmmph.

Adam (01:33.914)
I bought years and years ago for like, was like $50,000 is like just a two bedroom one job thing. And we rented that one too. And so I kind of just kind of fell into it through necessity.

Dylan Silver (01:50.07)
Necessity breeds ingenuity. think that’s the saying there. talking about managing a rental over distance because you were in a different city, was that challenging?

Adam (02:03.898)
You know, it could have been more challenging, but luckily for us, my wife’s sister manages apartments and she kind of, had a conversation with her and we kind of, you know, let them know upfront that, we’re like, listen, we’re going to be 13 and a half hours away. If you have problems, it’s going to take a little bit. And we rented it. Under market, you know, cause like I said, we couldn’t sell it. We, we, ended up taking, you know, a loss every month, just a couple hundred dollars or so.

But it was one of those necessary evil things. And we just said, hey, not saying we’re not going to fix them, but it’s going to take a second to get things done. so it worked out. had the first people who stayed in there. We loved them. their job transferred them. Otherwise, we would have kept them there for forever. And then we had a guy come in and his sister.

And they stayed there for a long time too because yeah, we rented it for Over a decade so yeah that way out why we’re out of town

Dylan Silver (03:12.578)
that point in time, were you active as a CPA when you were managing those rentals?

Adam (03:19.232)
I was a CPA but I worked for a firm. I didn’t work for myself at that point.

Dylan Silver (03:26.198)
Okay, so I’m curious because when I’ve spoken with CPAs, there’s of course a lot of overlap between real estate and sort of accounting taxes in this whole world. I’m still getting used to all the terminology. Were you dealing a lot with real estate back then or not entirely or not at all as an accountant?

Adam (03:48.218)
Uh, not very much. Um, I didn’t really start picking up the real estate knowledge side of it. You know, the, the nuances with real estate professional 1031 transfer, all that stuff until probably, uh, I came, I was coming back to Kansas city, roughly, you know, 2014, 2015, cause that’s when, you know, other things started happening. Like bigger pockets started up in like 2014 and some other podcasters I’d listened to.

kind of started putting content out and I’d listen to it about that time just to kind of educate myself because you know you do want to know these things when you’re a real estate owner but I did auditing work which was completely separate to a skill set than the real estate stuff was for a long time.

Dylan Silver (04:37.122)
You know, it’s almost like when I speak to folks who are in this position that they have this skill set that they don’t even realize is super transferable to the real estate profession, right?

And when I think about this, think about all the ways that I’ve seen tax strategists, accountants be useful in the real estate space. Something that I heard the other day, which really intrigued me, was a mini cost seg, right? And so hearing these terms thrown around, talking about real estate taxes and having to find someone who’s proficient in that really piqued my interest because I think the…

the more that homes inflate in price and the more homeowners there are, right, it’s only gonna make it harder for newer people to come on in so that when you do have someone who’s a first time buyer and you are trying to get into the space, you really wanna be armed to the teeth with everything that you can. And I think it’s great all this information that we have out there right now.

Adam (05:44.986)
Honestly, if you wanted to learn about it, their information is out there. just is. There’s so many podcasts like yourself and the big, they just kind of talk about how to do it. You can really learn how to do it, any nuance, whether it cost seg, going in without any money, subject to owner financing. It’s all out there. You just have to go find it.

Dylan Silver (06:13.036)
Now, when you were mentioning the rentals that you had, I believe you mentioned the condo and another property, you’re managing them over a distance. At this point in time, you’re starting to see some traction, some success in having a rental portfolio. Was this when the light bulb went off that, there’s something here, I should dive into this? And is that when you started exploring some of these creative deals?

Adam (06:38.434)
I mean, you know, I’m like everybody else that’s in this business. They started watching, you know, TV, like see the shows like, you know, Flipper Flop and, know, Flipping Las Vegas and all these other shows. And you get intrigued by it. You’re like, man, I think I could do that. it’s always honestly, I think what keeps people from doing it myself as well for as long as it was, because I obviously should feel like I should have done it sooner, is time, you know.

And sometimes it’s money, but for me really is time, just with work and my kids were a lot smaller then. so that’s kind what keeps you from doing, that’s excuses at least we get to ourselves from really kind of just going in and actually doing it and chasing it.

Dylan Silver (07:30.134)
i think about my own journey and i think about i didn’t have kids are people to support but i had a apartment in a car in san antonio and i was working almost around the clock in cardio shipping in san antonio and the for me to find the the emotional bandwidth to get into real estate was a lot of work it was a lot of

that it took and ultimately I decided I just have to dive into this. I did what is fairly extreme, which is I left my job to go pursue real estate. But I don’t think that people necessarily have to, especially now with all the tools that are out there, AI tools, not even necessarily for learning, but you can use some of these tools just to figure out what to learn. Like hey, I’m interested in buying a house or in getting a property through creative means.

What are some things that I should know? And I didn’t even, when I was getting in, I’m sure AI might have been in it’s, it might have been there, I just wasn’t aware of it. But in 2020, too, when I was thinking about getting into real estate, I wasn’t aware that this was out there. So all of the tools that I had were kind of the YouTube, the Google, and just through brute force networking and trying to meet people.

Adam (08:52.58)
There’s so much information out there and you really have to kind of cater to yourself because you get so many messages like, I’m going to bring a bigger pocket in because that’s obviously the grill in the room. And there you hear people say, just got to drop everything and do it. Just throw yourself all in. But it’s funny, I actually listened to another podcast from another people just yesterday and they’re like top five, one of their top five hints of

how to be successful in real estate was to not quit your job until it’s cash flowing. And they both make good points. Their point yesterday was if you quit your job and you’re doing real estate, when you make money, you tend to take it out. And I understand that. Instead of just because you needed to live on, of just plugging that money back into your real estate business. So mean, everybody makes good points, honestly. It’s just you kind of have to cater it to your situation. And I understand the…

the people who say you just gotta dive right in and do it and quit your job too because because sometimes you need to burn the ships you know you need to burn the ships and if you’re gonna do it you just need to do it and get rid of that safety net so I understand both points of view for sure

Dylan Silver (10:06.794)
I did it the burn the ships way, but I actually advocate for people who can to not burn the ships for so many reasons. the biggest one is that you’re gonna be, unless you’re successful right off the bat, which could happen, you might not get your first deal for months, right? And like you said, you’re gonna be dipping in, you’re gonna be operating from emotional scarcity. There’s so many what ifs, right?

Adam (10:14.573)
Yeah.

Dylan Silver (10:36.462)
But the reason why I feel like I had to, I had to, was because I just did not have the emotional bandwidth to get off of a 12 hour shift, sometimes 14 hour shift, get in there at 8 a.m., leave in at 10 p.m., Monday through Friday and then one day on the weekend. And then, you know, go to a networking event or…

Adam (10:36.505)
Mm-hmm.

Dylan Silver (11:00.118)
or learn about real estate, I could not do it. So I knew that this was the dream that I wanted to chase and that I was gonna go do it come hell or high water. But pivoting a bit here, Adam, you have experience in the Airbnb space, which is something that I’m passionate about as well, and have worked with investors who’ve done lots of Airbnbs. What specifically about Airbnb do you find attractive as a model?

Adam (11:27.77)
Well, the income, the income, right? Because if you do short the short term rental space, the potential for more, it’s kind of a risk reward thing. The potential for more income is there. If you’re doing things right, you know, you’re making sure that you’re taking care of your short term rental, you’re taking care of your, you know, your guests, you’re marketing it right. You know, you’re paying attention, you know.

to your guest requests and all that stuff, making sure things are staying on top of it. It’s more work than a long-term rental, but the upside is greater. And the reason we chose to do a short-term rental there is because the stadiums, both the stadiums, which may move, so that may change things, how we do things, but are like five minutes away. So most people to come in are coming in for the Royals games, the Chiefs games, things of that nature, you know, and spending the night. And then…

You know, we all have heard the horror stories of Airbnb guests that kind of just trash everything. But it’s a risk reward thing. The reward of more income and more revenue is there, but so are the risks of getting a bad Airbnb guest that damages your property and stuff.

Dylan Silver (12:50.07)
Let’s talk about the life cycle of an Airbnb deal and also what makes a good Airbnb. Starting from acquisitions, how do you find a deal? you getting it MLS? Are you getting it discounted rate off market? What kind of work goes into rehabbing it, if any? And then what makes an Airbnb successful?

Adam (13:12.602)
It was a complete rehab job. I think with complete rehab jobs like that, turning them into an Airbnb kind of works out because everything’s like brand new. From the floor to the walls to the bathroom to appliances, it’s all brand new. And I think when you’re having people stay at your Airbnb, they kind of expect that. And so as compared if you have like a

a house that’s already kind of there. just need to do a couple things too, which would be fine for a long-term rental because you don’t have to necessarily update everything. You would still have to tear out perfectly good appliances and floors and do things to get it up to Airbnb standards. when you do a complete renovation, I kind of think it’s easier to turn it into an Airbnb than

just buying something that’s almost there that just needs like paint and carpet because you probably will still have to do a lot of the same work anyway.

Dylan Silver (14:19.663)
Are there any guidance or approach that you would take to managing an Airbnb calendar or is that really just dependent on when people are booking?

Adam (14:32.058)
As far as the calendar goes, you just have to make sure everything’s up to date because we do have an overlap on ours a little bit because it’s an upstairs and downstairs and you can rent the whole house, right? So have to be super careful with the calendar that if one’s gone, you have to get rid of the listing for the whole house because obviously someone else can’t come in. And so that’s a lot of work and you have to check that every time you rent it out to make sure that’s being done correctly.

As far as the guests go, you just have to be careful. I find myself being very selective, asking a lot of questions. What are you doing here? How many people? To get a comfortable feeling before I rent to them because it can be bad. Guests can cause damage and it could be not worth the fee you get to replace the damage.

There people who have stories about…

Dylan Silver (15:30.53)
I’ve seen from time to time, I’ve seen that…

This sounds almost unbelievable, but I’ve seen it out so many times. I’ve seen a vacant period, meaning lots of space open can actually lead to a very long lucrative booking. So I’m not, I’m not terribly concerned, especially if you have a good location, like a Kansas city, right near the stadium, right? If there is a large vacancy specifically, if it’s a couple months out, that may be a good thing. What are your thoughts?

Adam (16:04.11)
I I agree with that 100 % and I would rather have it empty than be rented by somebody that it would take a while to clean it up and miss out on other listings.

Dylan Silver (16:20.866)
Pivoting a bit here, Adam, we talked about the Airbnb space, we’ve talked about your condo and the other deal that you had when you were starting out, but these are different avatars of real estate investment. There’s also flipping that I’ve seen in your bio. Do you have a preferred method that works for you?

Adam (16:46.554)
If the deal works out, obviously I would prefer to buy, renovate and just burn out and keep it. But sometimes, obviously that’s not possible. You get overruns, there’s repairs that you don’t see and you have to sell it.

to get your money out of it so you can do the next deal. But ultimately, if you had the money and you, if you had more investors, because I really don’t use investors, you can keep them. And that’s ultimately the goal, right? Is to keep your rentals because what’s the easiest way to get to a million dollars, that old saying is to borrow a million dollars, right?

Dylan Silver (17:17.623)
Yeah.

Adam (17:41.23)
So if you have a million dollars real estate now, 20 years from now, you’ll have two, three million dollars of equity probably.

So if you keep it and you keep… Yeah. So it’s funny, I had a conversation with one of my nieces, you know, who’s exactly 30 years younger than me. And I was like, I told her, was like, yeah, if you could borrow a million dollars or whatever. And…

Dylan Silver (17:54.998)
I couldn’t agree anymore.

Adam (18:16.512)
and put it in real estate and keep it and take care of it. When you’re my age, you’re going to be worth three, five million dollars. And I think that with some people, that’s kind of hard. That’s a kind of a hard concept to understand, but it’s, I mean, it’s completely true. So I think that.

Dylan Silver (18:34.648)
Yeah.

Adam (18:36.544)
as people who understand this, we need to kind of bang that drum a little bit harder to the younger generation.

Dylan Silver (18:44.32)
It’s hard to proposition real estate in a light of long-term patience, right? Because people want that quick cash. I forget where I heard this, but the fast money is the slow money.

Adam (18:51.992)
Yeah.

Adam (19:02.411)
Hahaha

Dylan Silver (19:03.534)
Because in actuality, when you shoot for the fast money, it ends up losing you money, right? So the actual way to make fast money is to do it the slow way. And I think with a lot of things, like for instance, consumer debt, right? You could, of course, rack up a bunch of credit card debt and get things that you think might benefit you, but then you gotta pay the bill. The thing that makes real estate so unique is that…

Adam (19:07.641)
Yeah.

Dylan Silver (19:27.564)
you can effectively not be responsible yourself for covering that premium expense because you have a renter in there, right? And then you talk about burring out of it, right? And so you’re able to utilize debt in a very, very unique way. I haven’t actually talked about this too much on the show, which you would think I would have, but…

It’s definitely something that I should dive into more because most people outside of the real estate space aren’t aware of how they can leverage debt to enrich them in real estate.

Adam (20:05.242)
I couldn’t agree with that more. that one of the failures to understand, especially for those outside of real estate, even those in that do flipping, don’t keep, know, because how many podcasts do listen to where they’re flippers and they flip 200 houses, 300, thousands of houses, and one of their biggest regrets is, I wish I would have kept more because they didn’t keep them. And the concept is so, is complicated to understand, but once you understand it,

Dylan Silver (20:27.288)
didn’t keep it.

Adam (20:32.907)
It just makes everything make more sense is, and I didn’t come up with this. I’ve obviously heard this in other places, but the value, you have a thousand dollar house payment today, that thousand dollars in 20 years is gonna be like, that’s gonna be your cell phone bill, right? But it’s gonna be, you know, for a house. So not only is the power of the dollar going down, so your buying power goes up. On the other side of it, your real estate appreciates.

So you’re winning on both sides of it. You’re winning on the fact that your $100,000 house in 20 years is going to be worth $250, you know, more than likely at least. So you’re winning there with appreciation. And then the $1,000 house payment you’re making is not going to be, the buying, I mean, the things that you could buy with $1,000 20 years from now is going to be way less than $1,000.

you now because I remember when I my first car payment was like a hundred you know hundred dollars now getting you know for people getting a car payment that’s over five hundred dollars is not all the relevant possibilities and so it’s so that you know that’s my point is like the thousand dollars you pay for your house payment yes there’s taxes and yes there’s insurance so that part will go up but for the most part your house your housing payment the buying power of every dollar that you this part of your house payment is going down

Dylan Silver (21:37.112)
Yeah.

Adam (21:59.704)
So once they really understand the fact that you’re winning twice, once through appreciation and then once through the buying power of going down of your dollar over time, I mean, it just makes sense. It just makes sense.

Dylan Silver (22:14.676)
Absolutely. You know, I think having been in the automotive space as a salesperson before I got into real estate, the biggest thing that I would see when it came to payment was people had their expectations for payment based on pricing from like four to five years ago when they got their last vehicle in many cases. And the pricing for payments had like almost doubled, if not tripled in many cases. Like people are shocked.

when they find out that they couldn’t get a two hundred dollar payment when the average car payment is well above five hundred in the united states plus insurance plus gasic you’re spending darn near a thousand dollars really on the low end right now to to own a vehicle in the united states if you’re a younger person driving in any in distance right we are coming up on time here and adam working folks go to to get a hold of you

Adam (23:07.418)
You can go to Adam Austin’s CPA. That’s probably, you can go my website and can send me a message. It’s, yeah, just Adam Austin’s CPA. That’s probably the easiest way to get a hold of me is through my website and you can contact me through, I use Calumly through my website so you can just contact me through there. You can also just email me at adamaustincpa.gmail.com too.

Dylan Silver (23:37.76)
Adam, thank you so much for coming on the show here today.

Adam (23:41.87)
Thank you for having me. I enjoyed myself. Thank you.