Landlording on AutoPilot: A Simple, No-Brainer System for Higher Profits, Less Work and More Fun (Do It All from Your Smartphone or Tablet!)

By Mike Butler

Simplify Your Landlord Experience with Smart Strategies and Smarter Tools

“Without Landlording on Autopilot, I doubt I would have ever succeeded with rental properties. Mike's book guided my business every step of the way, and I owe a huge debt to Mike for his insights. This book is a MUST-READ for any current or future landlord.”

-Brandon Turner, BiggerPockets.com

Landlording on Autopilot is the property investor’s guide to doing it all with less stress and higher profits. As a full-time undercover police detective, author Mike Butler developed his proven, simple system for managing hundreds of rentals on the side; in this book, he shares his methods to help you transition your rentals from a headache into a fun, problem-free source of consistent higher profits and income. Whether you’re looking for your first rental property, or just looking for a better way to manage the ones you have, this book shows you his strategies, mind-set, tools and technologies to make your rental business a boatload easier while giving you a lot more time to do what you want! Mike’s simple methods can be implemented in downtown Manhattan or Anytown, USA, whether you manage high-end penthouses or Section 8 rentals, and you can do it all from your smartphone or tablet—and best of all, most of the technology doesn’t cost a penny.

There comes a time in every landlord’s “landlording” experience when the income doesn’t feel worth the hassle. Don’t give up! Investment property can be a wonderful source of income—with the right approach. Mike Butler’s approach is “autopilot”, and it tips the scales toward more profit, more income, and much less stress.

• Discover the latest—and mostly free—landlording technologies
• HUGE Updates on Section 8, rental application processing changes, and more
• How To deal with the latest rash of federal, state, and local laws attacking landlords
• Explore market trends and conditions through the eyes of a seasoned real estate investor

If your properties are taking up too much of your life, Landlording on Autopilot is your ultimate guide to reclaiming your time—and your profit.

PLUS… FREE GIFTS from Mike Butler!

• “159 point Rent Ready Checklist”
• “Your 18 page ‘Ultimate How To Guide’ to Taking Multi-Purpose Photos and Videos of Your Rentals”
• 12 Brand New Updated FORMS for Your Rental Business

• Language: English
• Publisher: Wiley
• Release date: Mar 5, 2018
• ISBN: 9781119467908

Book preview

INTRODUCTION

How I Owned and Operated 75 Rental Properties While Working My Full-Time Job as an Undercover Police Detective (BEFORE Hiring a 5-Hour-a-Week Office Person)

Hello fellow landlord investors; I'm honored to have the opportunity to share my investing lessons and techniques with you. Not all of my landording education has been pretty. I've also got honorary PhDs from both the School of Hard Knocks and my private high school diploma. If I help you get on the fast track to holding good solid rental properties, it'll be another notch on my belt of achievements. Before we get started here, I'd like to share with you a little bit about where I've been, what I've done, and where I am today.

Photo illustration of a two-bedroom house in which Mike Butler grew up with his family.

Mom, Dad, and seven kids grew up in this two-bedroom home a few blocks from Churchill Downs, Kentucky

I grew up just a few blocks from the world-famous Churchill Downs, home of the Kentucky Derby. Our neighborhood consisted primarily of blue collar workers, where the definition of successful was to land a good job, at a good company, buy a home and get it paid off, and retire and buy a riding mower. In our neighborhood and church, I don't recall any doctors, attorneys, or CPAs. Those folks lived on the other side of town. I was the oldest of seven kids, and we were raised with a good strong work ethic. Pop worked at a slaughterhouse and proudly identified his occupation as a meat cutter. He'd let people know pretty quickly that anybody can be a butcher. Mom stayed at home and did a great job of keeping everybody fed, healthy, and in clean clothes. We had no clue we were poor. We knew Dad worked hard and I admired him and wanted to be just like him. I played football for nine years and got a paper route delivering daily morning and afternoon papers the summer after the eighth grade. This paper route was passed on to my brothers and sisters for almost a decade and delivering papers allowed us to attend a private high school.

I worked for 10 years at Winn-Dixie supermarkets starting out as a bag boy and working my way up to Store Manager. In November 1982, I had the wonderful opportunity to get robbed at gunpoint, with a revolver nervously shaking centimeters (not inches) from mynose.

This event, along with catching shoplifters (some violent), sparked my interest in law enforcement. I took a pretty good cut in pay to become a cop. My starting salary was $17,000. I worked all the overtime I could get and worked off-duty jobs for extra income.

I was very intent on finding something to supplement my police pension down the road. I feverishly read the classified ads daily, especially the Business Opportunity sections. I wanted the magic pill too. I thought it might be found in vending machine routes or coin-operated car washes and Laundromats. There had to be a simple, easy way to financial success.

My goal or objective was to spend my time and energy (because I had no money) into something that would grow in value and income. My attitude was I could simply outwork everyone else, resulting in success. I was searching for something to grow and make money as an ABSENT OWNER, a hands-off system. My gut instinct kept directing me to real estate and rental property, but I didn't have a clue how to get started, where to begin, PLUS I HAD NO MONEY.

In those days, HUD advertised properties for sale in our Sunday classified ads. I'd drive by these properties in my old Ford Ranger pickup and I thought I was learning my market by seeing how much HUD's asking price for the property was and trying to catch how much they sold for in just a few days or weeks. One Sunday in December 1989, a two-bedroom house on my old paper route showed up on the HUD list. I made an all cash offer below their asking price and had no cash. I just wanted the experience of going through the bidding process.

Low and Behold, My Bid Was Accepted!

Now what? We had about $1,000 in our police officers credit union savings account and I got pretty nervous. I went to the Louisville Police Officers Credit Union and got a loan on my Ford Ranger pickup, our old Monte Carlo, and an unsecured signature loan with auto-payments to be taken directly from my paycheck. This still wasn't enough to pull it off and do the rehab needed. I resorted to my last resource, cash advances on several credit cards.

We bought this house for $17,000, put $2,000 in rehab and completed it all in 13 days. I hauled trash and debris to my police sub-station dumpster at night. After renovating this little house, I went to Office Depot and purchased a generic rental application and lease agreement, and put a tenant in the property. (I was lucky. This tenant is still with me today in his third home withus.)

The short version of this story is that I refinanced this house by paying off all of those truck, car, signature loan and credit cards and ended up with $5,000 cash in my pocket PLUS we were making almost $200 per month positive cash flow!

Another pretty house, ready to go, went up for sale across the street. I repeated the same process without having to do any repairs except changing the locks. WOW! This was pretty awesome. Now, Tammy jerked my chain and said, WHOA! She was very wise and conservative and ordered me to ride it out for 12 months and see what happens because of the too good to be true jinxes.

After a year, we had over $6,000 in our real estate savings account and she let me off my chain. I continued buying rental houses. In the beginning, it was just simply a lot easier to buy stinky, broken, ugly houses in need of repair. I'd fixed them up and rent them out. People thought I was nuts. I was buying them at a good price; but I was NOT selling them. It seems like the rest of the world wanted the FAST CASH NOW. I was simply trying to build something that would double or triple my police pension in about 15 years.

Several interesting achievements were accomplished by accident.

I NEVER went to a bank to buy an investment property. I always bought the property first.

I NEVER used a hard-money lender or a private lender for financing.

We started off our first year with two properties, then two more the following year, and I set a goal of one house per month, resulting in 18 properties purchased. After this, I was going to set a goal of two houses per month (24 for the year). My good friend, local competition, and education partner, Jay Long, and I had the opportunity to see Brian Tracy in Florida during one of his annual real estate investor conferences. Brian Tracy did a presentation on setting goals and challenged folks to Shoot for the Moon! If you fall short and miss your goal, he'd ask: Are You a Loser? His answer: NO, You're Not a Loser, You're Just a STAR! Because of Brian Tracy, I adjusted my goal from 24 houses for the year to four times this … 96 houses, and rounded it up to 100.

Thanks to Brian Tracy, I did 85 deals that year, resulting in over 50 rental properties purchased and added to my portfolio. Absolutely incredible! That sure blows the doors off my original aggressive goal. Getting this Buying Machine cranked up was a huge challenge. There were so many train wrecks and potholes in the details of the Big Picture. I'll share many of those in later chapters in this book.

Warning

In today's real estate market, do NOT focus on quantity; focus on Quality. Each rental must support itself with a Pay Me First Mindset. Your rental must put money in your pocket every month. When I got started, I focused on quantity and I was buying rentals that were marginal deals. You cannot do that today.

The crucial learning for me was that I had to develop super-efficient systems, tools, and resources in order to realistically have a shot at achieving my goals. I hired my first part-time handyman on rental house #5 and pretty much never swung a hammer again from that point forward.

I used my noggin in creating my effective buying machine, managing rentals, and keeping it all together from a very small office in the corner of our basement. My communication tools were a pager and a cell phone. My real office was on wheels, my police truck. Today, absolutely everything is done remotely using my smartphone, tablet, or laptop.

As a cop and an undercover detective, I developed pretty darn good people skills or communication skills. I had a special ability of getting bad guys and gals to tell me their side of their story, either tape recording it or allowing them to tell their story in a written statement. An admission of the criminal offense, taken properly and legally from a bad guy, is one of the best pieces of evidence in a criminal case. What's kind of weird here is the bad guys usually thanked me as they were led away in handcuffs. I retired in March of 2000 and still get calls from bad guys in prison and on parole. Their girlfriends and family members have quite a bit different attitude about me. I know this is true, even today, because two of my little brothers are police officers,too.

Tammy and I lived off of our police officer and nurse wages. We chose to let our real estate grow itself. One beautiful Saturday morning, I checked the voice mail messages on my pager and found it full with 30 messages. I retrieved all of the messages and began returning phone calls at 8:30 A.M. while sitting downstairs in our lower-level kitchen. From this oak table, I could see the pond and swimming pool out back, the ducks and geese, and an absolutely gorgeous spring Saturday morning. I returned these 30 calls watching my pager dance on the table with more incoming messages. Tammy brought me a tuna salad sandwich at lunchtime and I continued returning phone calls, retrieving and deleting messages from the pager, and calling more folks. At 8:30 P.M., I still had a list of 30 people to call and I just realized I blew an entire beautiful Saturday because of our real estate business.

This Was Not What I Wanted from Our Real Estate!

I wanted our real estate to give us a higher quality of life, not a noose around myneck.

At this point, Tammy and I made the decision to hire a part-time office person. What a huge relief! She pitched vacancies and did a lot of stuff in her five hours. Yes, if she got behind on something, she'd work longer.

We operated 75 rental properties, plus the rehabs, and the buying machine before hiring a part-time office person.

This book will show you exactly how you can accomplish this too and to do it all 100% paperless by going all digital, using today's technologies.

You'll begin with learning the True Life Cycle of a Tenant from A to Z to show you the fundamentals, attitudes, and some of the pitfalls. By showing you the big picture, and the rewards and benefits that come with real estate, I hope it gives you the motivation and desire to stick with it. I kinda compare this process as very similar to learning to ride a bike. You're gonna get banged up and dinged up a bit, but if you keep working it, you soon learn to fly, for the rest of your real estate career. Just like a bicycle, if you learned to ride one as a kid, as long as our old aching body will cooperate, you could jump on a bicycle and ride one today … with a little more pain, perhaps.

From there, we'll move to some procedures of putting your Landlording on Autopilot with a very detailed and thorough, in-depth, process involving your Rental Application and the process of screening tenants. Just imagine what your landlording life would be like if all of your tenants were perfect tenants. That's your goal. That was my goal too, and I have conquered and achieved this goal over the years.

Imagine what your landlording would be like with those perfect tenants. Almost all of your headaches and nightmares commonly associated with landlording seem to almost evaporate and don't exist.

Your life really can be awesome. The key is to set up landlording on autopilot systems from screening tenants to your move-out inspection when they leave.

The next section involves polishing your system and cranking it up to the next level where you can actually begin getting more than 100% of your rents.

And finally, you'll have the opportunity to get the complete set of forms used in my Landlording on Autopilot System in PDF and Microsoft Word format immediately available by downloading it from my website. Plus, you also get free online training videos.

Real estate has rewarded me in so many ways. Money is not my measure of success. Success is the road; it is the journey. With success (and money), we've been able to help more people than I ever dreamed possible with my job as a cop. I've met great, generous people from all over this wonderful country ofours.

We're blessed to have all of these opportunities in our world. It's up to us to take action and make it happen for ourselves and for our families.

Good Luck and Happy Investing and congratulations on getting your hands on my Landlording on Autopilot System.

Mike Butler

Illustration of the signature of Mike Butler.

What's New in the Second Edition?

Today's technology is mind-boggling. With all of the free phone apps and other technology available for investors, there is absolutely no reason why you can't run your entire real estate business like I do, from your smartphone, tablet, or laptop from anywhere in the world, including cruise ships—all you need is an Internet connection.

PLUS, all of these technologies PROTECT YOU and YOUR BUSINESS BETTER because of the brain-dead simple, very accurate, and detailed documentation and recording of everything you do in your business—from buying rentals, to marketing, to managing your rental properties, move-in and move-out process, maintenance and repairs, paying bills, and everything else in between.

The second edition of Landlording on Autopilot is full of brand new proven strategies and procedures while bringing you the core fundamentals of the first edition. My goal is to bombard you with the newest information and strategies, allowing you to quickly advance to the next level. Work Smarter, Not Harder.

HEADS UP: I want to give you my no-holds barred insider secrets on how I run my real estate business in today's world. Please understand many of these technologies involve our favorite four letter F word—FREE; however, I am going to share with you some of the priceless, but not free systems and technologies to improve your efficiency and profitability of your business while giving you more time to Do What You Want In Your Life!

You will see a list of my recommended resources in the back of this book. I do not get one nickel for most of the products and services mentioned. I say this to let you know this is not a book designed to pitch products and services. It's designed to help you and your business. To drive this point home, you have my personal invitation to participate in several free Investor Training opportunities for you and your business. www.MikeButler.com/PowerLunch has Investor Training Webinars every week forFREE.

LEGAL WARNING!

It Is YOUR Responsibility to make sure you are in compliance with your state and local fair housing laws and landlord tenantlaws.

All content and forms in this book are from my real estate business in Louisville, Kentucky.

I highly recommend you get your own copy of your local fair housing laws and your local landlord tenantlaw.

Odds are, Kentucky's landlord tenant law will not work perfectly in your town. Some of the major differences involve:

Rent control

Late charges

Security deposit procedures and interest

Eviction laws and procedures

How many hour notice to tenant before entering

Residential Housing in the United States Is Sacred. You can prevent a boatload of expensive headaches by learning and having access to the rules and regulations your real estate business mustobey.

Grab your FREE copy of your Landlord Tenant Law. Go onlineto

http://askmikebutler.com/free-training/

SECTION I

YOU MUST HAVE THE RIGHT MINDSET FIRST

CHAPTER 1

Why Residential Rental Properties?

…because they are simple and easy when done properly.

Imagine what your life would be like if you had 20 nice rental houses paid for…

…and you could run your business from anywhere in the world using your smartphone, tablet, or laptop, as long as you have internet access! Awesome? Even Burned-Out Landlords Say Awesome!

This is exactly how I run my rental business in today's world. It is absolutely incredible how technology has catapulted my lifestyle allowing me to live exactly what I have dreaming about since my early teens.

How many businesses can you run from anywhere in the world? While smack dab in the middle of the ocean on a huge Royal Caribbean cruise ship, I can log in to my desktop in my office back home and drive everything just like I was sitting in front of my computer. This includes printing checks!

Now back to those 20 nice paid-for rental houses. Be Honest with yourself when you answer this question. Please do not allow yourself to be a Debbie Downer or Negative Nancy on Saturday Night Live.

But Mike…

I don't want to wait 25 or 30 years to get 20 houses paid for.

Been there, done that… I don't want Tenants and Toilets ever again.

Just answer the question. Would your life be awesome or miserable?

Even been there, done that burned-out landlords will admit their life would be awesome.

Now let's break it down into Fred Flintstone math. (Fred has only three fingers and this makes it really easy for me to cipher.)

Each Single-Family Rental House rents for $1,000 a month.

Subtract $500 for property taxes, insurance, repairs, and management.

This leaves $500 in your pocket every month for each rental house.

Now take the $500 profit on each rental and multiply by 20 rental houses equals…

$10,000 in your pocket every month!

(Okay, here comes Debbie Downer, who says, But what about vacancies, Mike?… Great question. I do not factor in vacancies on single-family houses because the average life of a tenancy is over six years.)

A few years ago, I conducted a research study and asked investors, How much money in your pocket, every month, would make you a happy camper? I was shocked. By far, the number-one answer was $10,000. These surveyed investors stated that having $10,000 in their pocket every month would cover their cost-of-living expenses and allow them to pursue the passions in their life. In other words, that much would allow them to do what they want to do in life!

Wow! Just imagine waking up every morning and doing what you want! Sounds like living your dream.

This survey really opened my eyes to the real-world goals and objectives of mom-and-pop investors. In addition to true financial freedom and independence, most are not greedy or selfish. Most investors have a HUGE heart and truly enjoy helping people.

In my early years, I can't tell you how many times I heard Money Is the Root of All Evil.

Odds are, you heard it too. And these words usually came from a poor person. Could this be their subconscious rationalization to convince themselves that poor is beautiful?

I say BALONEY! Let me tell you something here. GOOD People are GOOD People. Selfish, Greedy, Self-Centered, and Evil People will always be the same. Money has nothing to do with it.

I have discovered, assuming you are Good People, that you can help more people when you have money. Good People will be good people with or without money. Evil people will be evil people with or without money.

Personally, I truly enjoy and I am passionate about helping good people, who invest in themselves, to achieve true financial independence and freedom in three to five years and do it safely with the least amount of work, energy, and effort on their part. I enjoy being part of your real estate investing team to turbocharge and boost your results safely and quickly.

Here's what it boils down to: Would you like to make $10,000 per month and do what you want every day or make $50,000 or more per month and not have time to fart? (Just to let you know, I always set higher goals; a lot more than $10,000 per month.)

What about other investments, like stock, gold or silver, mutual funds, and so forth? Real Estate Investors invest in real estate primarily because they believe it is a real investment that they can control. You can see it, visit it, touch it, smell it, and show it off to friends and family. You can't do that with stock. You might be able to do it with gold and silver.

Here's the Biggie: Real Estate investments produce income for you. Because you own it, it puts money in your pocket and it has huge tax benefits—depreciation. Stock speaks for itself and it is an investment that you normally can't control. I am not a stock expert. Gold and Silver are being marketed as safe investments, but does owning them produce income for you? Nope.

Real Estate Investing 101: The Basics

Sorry, this may ruffle your feathers…

The BUSINESS Side of Real Estate is nothing more than a JOB. In short, because you do stuff, you make money. For IRS purposes, your profits are taxed as Earned Income (not good) (see Table 1.1). Bear with me on this, as my goal is to show you the BASICS, not the complicated strategies.

Table 1.1 Real Estate Investing 101

This is no different from being a used car dealer. Why? How? The typical used car dealer goes to wholesale auctions to buy cars at a huge discount and then resells them at a higher price for a profit. Sometimes they fix them up (retail) and sometimes they sell as-is (wholesale).

To really help you to grasp this BUSINESS Side of Real Estate, let's use a real-world example that happens to many folks. People are living longer in the United States and abroad. There are many reasons to drive this point home.

Imagine something, anything in your life that would disturb or prevent you from doing your daily routine in your business. Especially in the health-related fields, any family member, close relative, or friend, who requires your assistance, bedside in hospital, feeding daily, helping around house, and so forth.

Perhaps it could be yourself or an immediate family member; an injury at work; a health crisis like cancer; a major accident of some sort; and the list could go on and on. I'm going to assume you want to be with your family member and loved ones to offer support and comfort.

If you are laid up in the hospital, or incapacitated, you will put the rest of your life on hold or hit the pause button, including your real estate business. Now what happens to your income? It comes to a screeching halt when you stop moving. Health issue; car wreck; whatever; whoever.

Real Estate Investors are unique, and we live in our own little bubble. Most of the folks around us, including coworkers, family, friends, folks at church, do not understand why we do what we do. They NEVER will. Get used to it. You can lead a horse to water, but you can't make them drink. Take me, for example. I am the oldest of seven kids and none of them, zero, nada, of my brothers and sisters are involved in real estate.

Because you are reading this right now, you are already qualified to be a great investor, and yes, you are a member of our real estate investor bubble world.

Investing in real estate is by far, the biggest common denominator of millionaires, multimillionaires, and megamillionaires and billionaires. Like you, I honestly believe Knowledge Is Powerful and your learning NEVER stops.

Do It Safely—Keep Your Job!

Odds are, you might have been raised just like me. In short, most folks are not raised with a silver spoon in their mouth. Most of us have been raised in a blue-collar neighborhood with the good old-fashioned blue-collar-job mindset.

Do any of these items sound familiar to you?

ALWAYS Pay Cash: Never use Credit Cards because they are dangerous and will get you in trouble real fast!

AVOID Borrowing Money: The only exception is the loan to buy your home. Your Home Loan should NEVER exceed one week's take-home pay.

Get Educated with a college degree: No one can take this away from you.

Get a Good Job with