Maximize Your Returns: Turnkey Rental Strategies with Liz Nowlin

Tim Lyons 00:00
Alright, let’s get started. Alright, this is going to be Liz Nowlin from Mid-South Homebuyers. Gregory, are you ready?

Greg Lyons 00:15
Yes, sir.

Tim Lyons 00:16
All right, Greg. Greg has a little cold. I don’t know if you can tell.

Greg Lyons 00:19
I have the man flu.

Liz Nowlin 00:22
Who doesn’t have a cold this January?

Tim Lyons 00:24
All right. Here we go. I’ll make it. Thank you, buddy. You’re so courageous.

Greg Lyons 00:30
Thank you.

Tim Lyons 00:32
Alright. 3, 2, 1. Welcome to the Passive Income Brothers podcast. My name is Tim Lyons. And today I’m joined by two absolute rockstars, one of which being my sick brother Greg. Hey, buddy.

Greg Lyons 00:48
Tim, I appreciate the shout-out. I have a bit of the man flu. I’m a little under the weather with a sniffle. But I was able to tough it out because we have a fantastic guest today. And as I’ve always said, there are a million different ways to make money in real estate. And what Liz is going to drop some knowledge on us today is just one more way. So I’m excited.

Tim Lyons 01:11
You know, when I first got started on this journey back in 2019, I read Rich Dad, Poor Dad on the beach during a family vacation. Greg will tell you that I lost everybody for about two days. I closed the book, I turned to my wife, and I said, “Christina, I am going to be a real estate investor.” And she knows that I have these big, hairy, audacious dreams that she just said, “Yeah, Tim, you know, go for it.” And along the way, I didn’t know where to start, right? I wanted to be in real estate. I didn’t know how to get started. You know, there’s all sorts of books and podcasts and commercial and residential and mobile home parks. And what do you do, right? And I came across, you know, I got into the books and the podcasts, and I came across Mid-South Homebuyers and a lovely woman named Liz Nowlin. And now today she’s on our podcast. So Liz, welcome to the show.

Liz Nowlin 02:00
Tim, Greg, I’m so grateful to be here today. Thank you so much, Tim. As you’ve mentioned, we’ve been talking for a couple of years, and I’m excited to discuss all the cool, amazing, and weird things that come with real estate with you guys.

Tim Lyons 02:16
Speaking of journeys, you know, we all have one, right? We all kind of got on the train at some point. You know, why don’t you tell the listeners a little bit about your backstory? And how did you find your way into turnkey rental real estate?

Liz Nowlin 02:32
Great question. So it’s like a lot of things. It’s kind of funny and not a straight line, you know, when you’re a little kid and people say, “What are you going to be when you grow up?” How often do we end up there? But um, I actually started as a front desk concierge at a high-rise building that was so fancy and so expensive. When I was, I’m 43 now, I was 20 when I got that job. And we had $5,000 penthouses, and this is, again, 20 years ago, $900 studios. I got promoted and promoted and promoted, was a leasing agent, then an assistant property manager. At the time, I did property management in St. Louis for about 10-12 years. At the time that I left, I was managing about 500 units in the Central West End of St. Louis. It’s kind of funny, I was doing rentals during the entire housing boom, right? So some of these buildings had lower occupancies than they normally had, but it was because if you could fog a mirror, you could get a home loan. Then I transitioned to real estate in 2008-2009. It’s a funny story. I actually wasn’t intending to stay in Memphis at the time that I moved here. It was going to be a short-term thing for me. I took a job with Terry as a leasing agent, just way down the scale. And I was actually just to kill time for a couple of months. And Terry looked at my resume, and he looked up at me and he said, “You’re going to leave me?” And I said, “Oh, no, no, no, no, you know,” because he could tell that I was applying for something a lot less than what I’d done. And he said, “Well, maybe I’ll figure out how to keep you.” And I got him to 100% occupancy in six days. And after about four weeks, he kind of hit me with the, “You know, you used to do all the acquisitions, right?” But then he hired somebody to help buy, and he actually used to do the repairs, right? One of the first people he hired was renovators and stuff. And when he hired me to begin working with our investors, that really pushed him from kind of working in the business to working on the business. And I absolutely fell in love with working for Mid-South Homebuyers. I’m working with investors. One thing that is subtle, a micro-benefit of working with Mid-South, but it’s really true, is that Terry creates an incredible place to work. And you may think, “Well, I’m in California, I’m in New York, why do I care?” But I’m telling you that I worked here for 14 years. An investor’s direct point of contact after they close has been with Minaya, has been with us for 11 years. Our property manager, Matt, has been with us for 14 years. The turnkey is like getting married, the longer you own that home, the more money it is going to make you. And when you’re marrying a business, a business with stable employees really matters. Through my years of doing this, I can’t tell you how many times I’ve had people say, “Okay, Liz, I’m investing with you guys. And because you have this waitlist, I’m going to invest over here in Kansas City, or Florida, kind of in the meantime, and I’m going to work with you and work with them.” And then three or four years down the line, I get an email, “Liz, where am I on your waitlist? I’ve decided to just work with you guys.” And then I say, “What happened?” And I will hear, “When Deborah, the property manager, was there for two years, everything was great. And then she left, and they just haven’t gotten their feet back under them.” So just having that experienced, happy person on the other end of the phone, whether it’s your renter calling in and talking with an experienced leasing agent that’s going to close that high-quality renter that has a lot of choices about where they could live, down to the customer service you’re getting on the property management side or during the purchase process. So that’s kind of my fun, nonlinear journey into it. And I didn’t move to Memphis to stay. And now I’ve been here 14 years and own a decent number of houses here.

Greg Lyons 06:56
You know, it’s so interesting when we meet people or go to places that turn into these long-term things, and we have no intention of doing what you’ve been doing for the last decade, building a wonderful career. It’s so cool. So Liz, you’re in Memphis now. And I think this is going to be new to a lot of our listeners. Like, we’ve never had someone who did turnkey rentals on our podcast. So if you could, at a high level, we could dig into the details right after, but just give our listeners a little bit about what turnkey rentals are. What does that mean? And how do you make money doing it?

Liz Nowlin 07:35
Love it. So turnkey means the whole thing is packaged together. Obviously, you have all kinds of land lording, right? Maybe you buy a house, live in it, and then rent it out behind you, or you buy a house in your local market with a realtor. There are all sorts of different ways to do it. But there’s a ton of legwork and a ton of risk for the individual investor doing those things. Not on a side note, most people don’t live in markets that support cash flow. We can talk about what makes it, but even if you have a shot at doing it, it would only be in your local area. And most investors, particularly, live in very high-cost-of-living areas where the numbers just don’t pencil out. What you get with turnkey is local experts in markets that are cash flow positive, who know the streets like the back of their hand, know the market norms, have skilled renovators, skilled repair people, and skilled property management. It’s like, I always say, investing in the stock market, in the sense that you don’t typically fly out and tour the business of the stock investment you’re making, though we love it when people come visit us down here. We can talk about that. It’s always an option too. But I will say, for example, 95% of our investors have never set foot in Memphis. The transaction is done online, and then that rent money is just coming to your bank account while you’re hiking with your family or at the beach with your family, and you’ve got experts managing your investment. So it’s a great thing. And I will say, I buy my houses directly from the company. I do not get an employee discount. I pay the same purchase prices your listeners would pay, and I have my properties professionally managed by the company also at the same price. If anybody could recreate that business model, it’s me. I’m here locally, I have property management experience, and the value we offer is great enough that it would cost me $130,000 to recreate from scratch a $120,000 Mid-South house, just because essentially, we’re buying in bulk. I would be paying one time for a water heater or one time for a new roof. You know, I’d be paying an individual electrician; we have electricians on salary. So I just love that the easier option is the more affordable option. That doesn’t line up very often. But yeah, so broad strokes, turnkey is investing in real estate via experts that might not be in your hometown.

Tim Lyons 10:24
Liz, I love that explanation because as all my listeners know, I love building out teams and processes. And if you’re a high W-2 earner or even a decent W-2 earner, and you think that you can’t be a real estate investor because you just don’t have the capital, but you may not know that a place like Memphis exists. Liz, what’s the average home price right now that you’re seeing?

Liz Nowlin 10:48
I average $130,000.

Tim Lyons 10:50
$130,000.

Liz Nowlin 10:53
A property like that needs new roof, new furnace, new HVAC, no deferred maintenance, new kitchen cabinets. So that $130,000 is essentially a practically brand new house. And that’s going to be in a quality neighborhood that can attract a quality renter. Memphis is one of the most affordable low-cost-of-living cities out there. And with the great financing that’s available, you can walk into that for 20% down. Our actual cheapest house was about $104,000. So you’re talking about $25,000 all in. So if you think about how many opportunities you have to be an accredited investor, which is what, $500,000 in the bank these days? I don’t know, but it’s a great welcoming bar of entry to get into real estate.

Tim Lyons 11:46
And that’s the greatest thing that I really like about you guys. You know, because listen, at the end of the day, I’m from the Greater New York City area where there’s no $130,000 houses. For $130,000, I don’t know, maybe a parking spot, you know? Like, so there were a ton of limiting beliefs getting into the real estate game because I’m thinking that a single-family home is $456, $700,000. And how am I ever going to hit the 1% rule and get $4,000, $5,000, $7,000 a month in rent? It just didn’t pencil out, didn’t make sense, right? And the few people growing up that I knew that did have rental real estate, they looked like geniuses 20 or 30 years later. But they were probably losing money and a significant amount of money during the holding period because they were floating the note. And they were probably paying for the expenses and the deferred maintenance all out of pocket, right? Because it just wasn’t a good cash flow market. Are there opportunities? Absolutely. There’s opportunities everywhere if you can work hard enough and find them. But the value that Mid-South has is really going out and finding those maybe dilapidated houses or houses that have just fallen on some hard times or there’s a distressed seller or whatever it might be, taking that home, having the bulk—I don’t know if you mentioned you buy in bulk, but they have a warehouse, at least one that I know of. And they buy all these materials, they stack them up on these huge shelves, and then they do the same exact turn on or renovation process on each of these homes. Right. So you can see how the scale can build right to the same cabinets, the same flooring, the same faucets, the same light fixtures. And then when something breaks, well, guess what? They don’t have to go find a different part. Now it looks a little makeshift. I don’t know what word I want to say right now. But you know, they have the same part they can go to the warehouse and grab it. Right. And they have people on salary—electricians, carpenters, roofers. Right. And all these things make sense. And you know, the turnkey model, are you going to make the most amount of cash that you probably could on the cash on cash return? Maybe not. But are you having peace of mind? Are you having cash flow and tax benefits? And you know, 30-year fixed-rate mortgages, and what the tenant, you know, the real estate paying us in five ways? That’s the value to me for Mid-South, was how did I do something sum that up here, you know, Mid-South Homebuyers?

Liz Nowlin 14:03
You knocked it out of the park. You know, the vertical integration that this particular turnkey model offers is very hard to replicate. Aside from the fact that Memphis is Forbes’ number one cashflow market year over year, aside from the really fantastic landlord-tenant law that both Tennessee and Arkansas offer, there’s no other property management company that is going to have every component of your house already sitting on a shelf. Let alone, as you mentioned, the in-house service technicians, the warranties that we put on the property. You know, all of our investors love us, but my investors that are our biggest fans are folks that have either done it in their local market or are doing it in their local market or have bought from other turnkey buyers. And where that starts to pop up for them is how much we keep maintenance expenses down over the long term. I always say, if you bought two identical houses from us and you took one to a different property management company in Memphis, you would be floored by how the one you left with us outperformed its twin. Most property management companies are third-party standalone property management companies, so you just buy a house and then you just hire someone, they don’t really care if you are happy that you bought the house. With us, it’s a little bit different; we really want you to want to come back in and buy more houses, we want you to refer your family and friends. So all the way down to not monetizing maintenance. There is no upcharge on our maintenance. Your listeners may not know this, but it is universal to upcharge maintenance in the property management company world. I have never encountered a property management company that did not; 10 to 15% is normal, there’s nothing wrong with it. So it just has to make money, it is the standard. However, we do not. So you’re talking about a 15-20 year hold, where every drop of paint is passed on to you, you get what the property management company paid to buy that paint, the labor is sort of the labor. For example, it would be years and years and years for your property to need an electrician, or your property may never need an electrician. But let’s say it did, that charge to my investors today is $75 for the hour. And that’s because that guy is on salary with us. Greg and Tim, if y’all have ever hired an electrician, if you paid $75 for the hour, give me that guy’s number. So all the way down to maintenance and vacancy, they are the biggest killers of return, and we’re really able to mitigate that through a lot of that. If a guy is working on my water heater on my house, and he has to stop what he’s doing, and drive to Home Depot and wait in line and check out and drive back, I am billed for that time. That’s how every repair works the world over with us. Everything sitting on the shelf, you know, we’re now managing 4,500 houses. We’re the oldest operating turnkey provider in the US. We’ve been in business for 23 years now. And it just all kind of fits together and works really well for the long term.

Greg Lyons 17:30
You know, that’s a really good point about property management. I mean, when you call anyone these days, there’s always a trip charge at $5 here, you know? So it gets really expensive before anyone ever does any work. So, you know, this sounds interesting. So if I’m sitting here, I’m a listener going, Oh, I may want to get into it, you know, this rental real estate stuff and buy the house and stuff like that. How about this? You’re in Memphis, you invest in Memphis, and some people have no idea about Memphis. I think the Memphis Grizzlies are there. I think there’s a big FedEx headquarters, something like that. Right? So if someone says yes, I’m interested in Memphis, can you just give us the bullet point of, they say they raise their hand, they have a call with you, and take us through the buying process. But let’s start with why Memphis and why should investors be investing in Memphis?

Liz Nowlin 18:22
Love that. So to kind of share how unusual these markets are, let me tell you guys that we have investors in 17 different countries around the world, and all 50 states. I have Japanese investors that we work with solely through translators, Australian investors, French, English, Brazilian, Canadian, you name it. It’s not a coincidence that they are all coming here. In broad strokes, rents and mortgages, or rents and home prices, tend to correlate nation-wide. So rents in New York are sky high, rents, and purchase prices are sky high, no margin. You can buy a house in some tiny town in Arkansas or Kansas for $40,000, but when it rents for $300, again, that correlation kills it. And what happens in Memphis is that our economic drivers, our labor jobs, factory jobs, distribution jobs, over 40% of our renters work in the distribution industry. As you mentioned, Greg, FedEx is internationally headquartered here. And that is a 200-year-old industry, now not FedEx, but distribution. So for example, before the Civil War, all cotton grown in the US came through Memphis. Today, all cotton grown in the US comes from Memphis. Talk about a stable industry. One thing I love about it as an investor myself is that you know, you think about cities that have suffered from blight or have gone downhill, right? Maybe like Detroit comes to mind, all these wonderful parts of Detroit where you have this big industry shift. There is no way that China or Mexico can ever be the cheaper way to get a package from New York to LA. Our geography has entrenched that industry here. If you look at a map of railroads, we are the third-largest confluence of rail in the US. We have tons of renters that work in labor jobs for all of the rail around here, barges going up and down the Mississippi. And so what you have is well-paying blue-collar work. And what that does is we have really high renter demand that doesn’t correlate to purchase demand in the local market. So it’s one of the few places in the country where the rents are, as a standard, quite a bit higher than what your mortgage is going to be. Or if you’re a cash buyer, what that relationship between the rent and the price is. We are 50 53% of the Memphis population rents. We are, I believe, the 48th biggest city in the United States. So we’re in the top 50 biggest cities in the United States and over half our population rents. That’s so unusual, it puts us in the 99th percentile. For a percentage of renters, it really makes it almost I call it a landlord’s market. You know, you hear about a buyer’s market or a seller’s market. This is some weird minutia. But one of the things that often surprises my investors and certainly floored me when I moved here from St. Louis was that the absolute market norm here is that renters provide all their own appliances. As an MO to any renter that comes to us and applies with us, they’re typically renting another single-family home, that landlord asks them to provide their stove and their fridge. Every other landlord in town is not providing those things, which means our investors never have to repair appliances, never have to replace appliances. When I first moved here from St. Louis and started working for Terry, and he told me to remind the renters to bring their own appliances, I thought I was working for a lunatic. I was like, I’m gonna get laughed off the phone, this man, I can never rent a house for this man. And then literally the first person I talked to, and I timidly kind of say this thing, like, don’t forget to bring your appliances. And she was like, oh, no, of course. And she actually stopped and said, there’s nothing in there, right? Because she already owned her stuff. And she, you know, she would have asked me to get it. So when I say a landlord’s market, you’ve got all these years of landlords sort of not having to compete with each other in ways that they do in other cities. So it really has evolved in a kind of a unique way. I’ve never seen a city where it’s as common to rent a single-family home here as well. I think in a lot of markets, if you’re writing a check for rent, you have shared walls, right? You’re in a quad or an apartment building or something like that. Most people locking the front door of a single-family home, own it.
Tim Lyons 23:20
There’s a lot of pride of ownership, but that tilt, right, where you’re in a single-family home, and it’s, you know, brand new, basically from the roof down to the front door, basically, you know, can you actually take us through, like, you know, the screening process, because you guys are the property managers, you’re the asset managers, you know, you have a whole team built out, you know, so how do you find those good renters? You know, seems like there’s a lot of them in Memphis to choose from. But I’ve heard you before, you guys have a pretty robust system to screen the tenants? And do you guys still have any, like rental guarantees for a specific amount of time or anything like that? How does all that work?

Liz Nowlin 23:58
Absolutely. So much to unpack there. So, you know, tenant quality is everything. Property management is everything. As my boss, Terry, will say, you can manage a marginal deal to success, and you can manage a good deal right into the ground. Brick and mortar cannot write a check. Only a person can write a check, and it is the engine that makes it turn. I can say this: if a renter is approved with our property management company, Mid-South Homebuyers, they would get approved anywhere in town within the limits of their income, we have every box to be checked that everybody else has, at about three that they don’t. And so, obviously, you have to make at least three times the monthly rent. Of course, you have to have prior landlord history. And of course, we’re going to verify that that income is, you know, permanent and stable. With us, we’re also going to do a criminal background check that has to be crystal clean and minor. Maybe a traffic violation. I’ve seen property management that do them, but only if it’s like murder; they roll it out. I’m not joking. And then the nuance to the nuance that comes from this level of experience, because you do see newbies in real estate getting burned, because they think that because they’ve rented once or because they live in a home, that they understand a little bit more about it. And they would not have that sort of hubris of thinking, ‘Oh, I’m going to invest in Coca-Cola because I understand how the soda manufacturing business works.’ And so some of that nuance that comes in, I think, is really interesting. So I’ll give you an example. Prior landlord history, right? That’s what everybody requires. Let’s say you’re a renter, and you lived at Oak Shores Apartments for two years, you left in good standing, you got your security deposit back, you went live with your mom for a year, for whatever reason, you come apply with us. Everyone else in town, we’ll take your two years, good rental history from that place. You went to that a year ago? One of our rules that nobody else has, and there’s a lot of them is that you have to have paid rent yesterday; we want to talk to the person you paid three weeks ago. Where does that rule come from? Well, being in business for 20 years, every time we ever had a renter fail to pay, fall off the books you don’t, you’re not work out, we go through, we would go through that file and say, ‘Is there anything did we have a clue here that could have predicted this?’ Well, spoiler alert, sometimes when people haven’t been paying a big bill, and they go and take on a big bill that they haven’t had a bill that size for a year, they struggle. And so that’s just one another, you know, sort of similar vein, say, you make three times the monthly rent as your income. But you’ve been splitting a house with three other guys, your portion of that rent was 350 a month, you’re applying for a single-family home with us because you’re tired of the roommates, and that rent is 1400? Well, you are quadruple and more than quadrupling a bill, we might tell that individual will approve you for up to $900. But we’re sorry, this 1250 is too much compared to what you’ve been paying. Anybody else is just gonna say income rent check. And so all of that is through decades literally, of a learning curve. And figuring it out as we go. And so we just put a lot into it.

Greg Lyons 27:37
Yeah, you know, it comes from experience, right? And that experience is not from having one single family or one duplex, it’s from yours and multiple properties managing, you know, it’s a lot that goes into it. And you’ve seen it all, it sounds like. Tim asked this a little bit earlier, but your company is kind of unique because of the guarantees that you have bumper-to-bumper warranties, 90-Day Live, 90-Day Lifetime, one-year refill cashflow after close. Could you kind of walk us through all the different guarantees that Mid-South Homebuyers has, because that is pretty unique.

Liz Nowlin 28:15
I love it. Thank you for doing that too. There’s so much to unpack with. I’ll keep me on track. Um, so our 90-Day occupancy guarantee is a lifetime occupancy guarantee; it is written to our management agreement, there’s no extra expiration. And it says essentially that if we ever could not find a renter for your home, you know, renter A moves out, we start marketing it. If we don’t have someone, not a deposit-taking, if we don’t have someone moved in and writing you checks by 90 days, we start paying you market rent, not alone, not, you know, just free and clear yours until the day we get that person into the home. Now, here’s the interesting thing about that. It’s never cost us a penny. It’s easy for us to say, yet you will not find another company that will put it on paper. Our longest vacancy on record is 65, maybe 75 days on the far end. I will say that probably 30% of my investors that I talked to that have managed properties and other areas have experienced a 90-day-long vacancy or longer. Why do I put it in writing when it’s not really something people are experiencing? It’s a way of letting people know that our rents are real. And let me explain what that means. One of the places that bodies are buried, so to speak, in the turnkey industry is inflated rents to support a higher purchase price. And you’d be shocked at the relationship $25 in rent on a finance purchase is going to equal about 4000 $1,000 in purchase price spread out over that 30-year loan that’s going to bump your mortgage up about 25. So you just need 25 More in rent. So think about the carrot in front of the average turnkey seller’s nose, you know, let’s get 1025 for this house and sell it for a couple grand more instead of 1000. It can be particularly, particularly with investors being from much higher cost of living areas, someone from New York could never know that 1050 is too much for this house in Memphis because it would rent for three grand where they’re from. And so they pay a purchase price associated with a certain return for all in reality, perhaps that in that turnkey provider held it vacant for four months to get someone willing to pay above market, whether they’re from out of town, or maybe their credits a little weak or something like that, and then the one year passes, that person is going to move out, and you have a long vacancy, and they suggest you drop your rent our rents, even though it means we sell the houses for a little bit less less, because to rent them at the most competitive rent, and still make sure it’s attractive that my phone rings with someone wanting to buy the house, it doesn’t mean we have to price them a little bit less. But we’re recouping that with repeat buyers coming back and referring their friends. And frankly, valuable properties are easier to manage, you know, if you get a choice of two identical cellphone plans, and one of them is all of $3 cheaper, you’re going to pick the cheaper one. And so our business model is to have Mrs. Smith in a slightly nicer house than her neighbors and friends paying maybe $5 A month less. And that’s all it takes to make the phone ring off the hook make us have a big pool of applicants to choose from. And so the reality is that that 90-Day occupancy guarantee is letting your listeners my investors know these rents are real, these rents attract quality renters, these words give you high occupancy. And in a way that is us bringing our expertise to you as well, a first-time investor is going to think that they should go for the highest rent that they possibly can. And seasoned landlords will tell you that you shouldn’t be competitive, you should provide value, and that will actually make you the most money.

Tim Lyons 32:22
So, as we talk about all the time on this podcast, education is the first step, right? You have to read the books, go to the conferences, listen to podcasts like this, get on the phone with Liz, and talk about this. Because if you don’t know, if you don’t have the education, you’re going to make poor choices, right? And you might go with another turnkey provider that promises you the world and it doesn’t work out. Then you’re going to say real estate stinks, and then you’re going to go back to your comfort zone. But if you have the education and you take the action associated with that education, that’s going to lead to your success. And that’s why I’m so grateful that we had the chance to have you on the podcast today. Because, you know, being from the Greater New York City area, I know tons of people, they want to be involved in real estate, they just don’t have the time. They don’t have the minutiae, right? That 1050 versus 1025, it’s a world of difference that could make, right? And how do you know how to, you know, start building a team from scratch? You know, good luck trying to find a contractor who’s going to be loyal to you when you’re 2000 miles away. So that’s why, you know, I was a fan of you guys. I never ended up pulling the trigger because there was a waiting list, and I got impatient and went out and bought a three-family property closer to my house. I managed, and I actually ended up selling that after two years, doubling my money, of course, but I finally had that education and that real-world experience. But, you know, before we jump into the last three questions, just give us an idea. Who is your ideal investor? Like, who do you talk to the most on the phone?

Liz Nowlin 33:51
I love everybody. The thing is, I have very sophisticated and wealthy people that invest with us because we offer one of the highest returns on investment. So when I say that I love helping first-time investors, I don’t want people to think that we are some sort of starter investment. I work with some of the most sophisticated investors in the world. But I also absolutely work with people making their first home purchase in life. One of my favorite sets of people to help is, I mean, I have folks that are renting in Manhattan, they will, they will. It’s going to be in their 27. Right, and it’s just not within reach or they’re renting in Santa Monica. And so not only are they not familiar with investment, real estate, they’ve not even bought a house to live in yet. So they have some kind of rudimentary questions. And you know, I’ve made it my business to know the best lenders coast to coast for quote interest rates and closing costs, the best landlord insurance policy that is on the planet for coverage, you know, all of this kind of stuff, you’ve got the full one-year warranty right on top of for the maintenance, right, you’ve got a bumper-to-bumper as we joke, a one-year warranty on the house, that is the longest maintenance warranty in the industry. Most people are zero-sum or 90 days. And so some of the protections that we offer, and helping people get into real estate when they’re locked out of it in their home market is kind of personal. So if you have 12 houses still call, but for those that it’s their first kind of no question too big or too small. We’re here to help.

Greg Lyons 35:39
And then really the last question: How long do investors typically keep their homes? Is this a buy-and-hold, or is this a buy-and-flip? What are your average investors holding the homes for?

Liz Nowlin 35:50
Great question. I mean, everybody is holding onto what they got and trying to get more. The longer you own it, the more money you will make. I have one investor that buys a home for every kid in the year of their birth, which I think is really neat. And they will be theirs when they’re 18 to sell, refinance, whatever. I hold onto all mine. You can, you know, there’s people standing in line for these houses; you could sell it for what you paid for it the day after you closed on it. But really, putting the beautiful thing it was real estate this time, you know, and just as the value of that home goes up, the value of the rent goes up, your principal and interest payment is fixed. So I would say 15 years, but it actually feels longer. People just don’t tend to sell.

Tim Lyons 36:40
I love it. Well, this has been a masterclass. We’re actually going to have to have you back on at some point because I have about 4000 more questions. We didn’t get there yet. So, the first of the questions that we ask people is, you know, a de facto mentor of ours is Jim Rohn. And he was a personal growth and development guy. And he said that a formal education will make you a living and a self-education can make you a fortune. What does that quote mean to you?

Liz Nowlin 37:07
Oh,man, I think it’s genius. My boss who is my financial hero, and Guru has told me that he that Terry’s Oh, man, I think it’s genius. My boss, who is my financial hero and guru, has told me that he, Terry, probably spent $200,000 on real estate boot camps, different educational programs, conferences. He talks about listening to books on CD, on headphones, sweating copper pipe under a house trying to learn about real estate. Even the way that I organized my team and my employees and helping our investors, getting things done is a program I can’t remember the author’s name. But Terry had done that educational course; he gave me those CDs. I now operate by the Getting Things Done method. I personally did not finish college, and I don’t miss the liberal arts, the debt of the liberal arts degree I would have finished. And I think folks can do so well pursuing their passions. But yeah, listening to podcasts like these and standing on the shoulders of giants is the way to go, in my opinion.

Greg Lyons 38:14
Liz, I could tell that you have been in the personal development space for a long time if you are listening to things on CDs, only to listen to the tapes.

Liz Nowlin 38:29
Blockbuster, but…

Greg Lyons 38:31
This is heartwarming for us. We like it. So, the second thought we have is, you’re at the cocktail party and you tell people what they do. “I’m in real estate.” And what do you say to the people that say investing in real estate is just too risky?

Liz Nowlin 38:48
Oh, man, there’s a quote from Teddy Roosevelt, there’s a president who said that sort of well-managed real estate is the best risk-adjusted return in existence. To me, the stock market is so much closer to the casino; it’s so much harder to understand what may be going on with the board of directors or something like that. So you can literally carry insurance on it. If your house burns to the ground, you have somebody who’s gonna write you a check for the full value of it. I’ve never heard of anything that if my stock goes to a value of zero, anyone comes around and puts me a check for it. You look at a graph of a 50-year timeline of real estate, 100-year timeline, there’s one trend, you know, even you look at the Great Recession, which is really very unlikely to ever be repeated. And in nine years values are backward. They were unintended. They’re surpassed again, Mid-South actually was in business since 2001. So we actually were in business right until we had investors buying from us in 2005, 2006, 2007. Rents in Memphis never went backwards through the greatest recession since the Great Depression. That’s untouchable to me. One of the things we were actually talking about it, like when values were really high when I at the beginning of the podcast here. When values were really high and home prices values were just quadrupling, occupancies were a little harder because renters were going that way. Well, when the recession hits, it strengthened the rental market; talk about a bulletproof investment. When the economy goes down, that does not create homeowners, that creates renters; harder to get your down payment together, easier to catch a little ding on your credit. And so we weathered the greatest recession since the Great Depression without our investors losing $1 in cash flow. And by the time you would ever even kind of conceive of wanting to sell, your value is up. So that would be what I’d say.

Tim Lyons 40:46
I love it. Well, you know what, there’s something that you touched on there was, you know, a famous president, you know, could have been 100 years ago, it could have been 200 years ago. You know, the fact that real estate is an asset class that literally anybody can take part in, right? There’s 1000 ways to make money in real estate. It’s something that I love to write, you don’t need a college degree, right? We don’t need to be a rocket scientist, you just got to be educated and surround yourself with good teammates. And you can probably do pretty well in real estate. So I love that was the third question. And final question is from Robert Kiyosaki, author of Rich Dad, Poor Dad. And he has had an effect on a lot of us in the real estate space. But he can say something that can turn people off, but I want to get your thoughts about it. He says that savers are losers and debtors are winners. What does that mean to you?

Liz Nowlin 41:41
Never been truer than the runaway inflation that we have seen. In the last couple of years, I, I was telling a good friend of mine that if our bank accounts were expressed as how much bacon Could you buy, with the amount of money that you had, instead of dollars, people would be flooding the streets, people would be panicking, because you would check your savings account every day. And it would be less and less and less and less. And people are fooled by the fact that it’s either staying the same or slightly growing because they are not connected enough to inflation. I think of my investment homes as brick paintings. And when I take cash that is just literally actually bleeding, right? Like even if you’re in kind of a high-yield savings account, it’s not keeping up with what’s going on today. And then I put it in my brick piggy bank, where inflation is its best friend, and you literally take something that is bleeding you and take it and put it into something that is boosting you. And the debt aspect of it as far as borrowing against that home just makes a lot of sense. There’s on our website on Mid South homebuyers.com, you can go the available properties, and there’s IRR is an internal rate of return. And you can just fiddle with it. And when you use other people’s money, the return is better.

Tim Lyons 42:58
I love it. Greg, you know what? Part of being a podcast host that I didn’t think I’d love, but I do, is hearing certain ideas. Like if you treated your bank account like how much bacon can you buy? I mean, it’s all about the bacon sometimes, Greg, you know what I’m saying?

Greg Lyons 43:15
In fact, I’m getting hungry right now.

Tim Lyons 43:18
Awesome. So Liz, I appreciate you. I appreciate your enthusiasm and your knowledge about this space. And you know, just so we can satisfy and check the box for our compliance officer people. You know, this is not a solicitation of an offer to sell or buy real estate. We’re not making any offers right now; we’re just simply giving you some education and letting you know some of the opportunities that are out there if you’re willing to get educated and take that action in the turnkey rental space. So with that being said, Liz, if people want to find out more about Mid-South Homebuyers, if they want to hop on a call with you or somebody on your team, what’s the best way for them to do so?

Liz Nowlin 43:53
Fantastic question. So we are just midsouthhomebuyers.com. And actually, I truly want to help people, whether their interest is investing in their local market or anywhere else. There is a due diligence report on the homepage of our website. It says stop, don’t shop. Don’t invest with anyone, even up until you’ve read this report. And it’s 19 questions that you can ask any turnkey provider, or even really a property manager, depending on what you’re looking to do in any market. And it is going to help you suss out some of the weak spots in investing as you’re looking around. So I encourage folks to check that out. Almost anything you click on that website is going to lead you to me. I am just Liz at midsouthhomebuyers.com, Li Z. And so I’d love to hear from folks, I set aside an hour for every phone call that I’m going to get on and again whether it’s your first or your 400th, I’m excited to talk to folks and help, again, even if your interest isn’t necessarily here. We always want to help.

Tim Lyons 44:57
Well, that was great. I really appreciated the time from both you guys. So that’s going to do it for this week’s edition of The Passive Income Brothers Podcast, and we look forward to serving you again next week. Thank you, guys.