Recover from Vacation Overspending and Avoid Costly Rental Property Management Mistakes

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Hey, Sean, did you know that new data from the UK government found a record number of Americans applied for British citizenship in the first three months of 2025?

Elizabeth, I did not know that, but having just returned from 10 days in the UK, I can absolutely see why.

And also, Sean, judging by your Instagram updates, yes, I was stalking them.

You seemed to love it.

So we, the people, want to know if you'll also be applying for citizenship too.

I don't have any plans to change my citizenship immediately, but I will be returning to the UK just as soon as I can.

Welcome to NerdWallet's Smart Money Podcast, where you send us your money questions and we answer them with the help of our genius nerds.

I'm Sean Files.

And I'm Elizabeth Ayola.

This episode, we answer a number of questions about how to manage a rental property.

Questions that come from a certain co-host, MHim, of mine.

Yes, I'm in the process of renting out my home and I want to make sure I'm doing it the right way, as in the nerdy way.

But before we get into that, Sean, you just got back from London and I want to hear all about your trip.

Yes, I just spent 10 days there, as I said.

I was touring gardens around England with some of my college friends.

I spent a lot of time in London.

I saw one of my favorite bands, the Scissor Sisters.

I had a wonderful time.

It was hard to get back on the plane coming home for sure.

So I have two questions that come to mind.

One, we're going to start with how was the weather?

Because the Brits are known for the gloomy weather.

Weather was surprisingly beautiful.

I guess they've been having a drought.

And so everyone that we talked with was kind of bemoaning that.

But what that meant was that everything was in bloom all at once.

There were roses and irises and camellias and just everything that should be more staggered blooming wise kind of weirdly was all out at once.

And while people were freaked out about it, I was really loving it.

I had a great time, brought a rain jacket, didn't even use it.

Oh, I love that.

Now I have to ask you, we have to settle this once and for all.

What was the British breakfast like?

Because Brits get a bad rep for the breakfast.

The food was the one thing I was really wary about going into this vacation.

And I'm like mostly vegetarian.

I define myself as arbitrarian because what I eat is a little arbitrary sometimes.

So I was nervous, but the food was really good.

A full English breakfast is kind of the perfect balance of sweet and savory.

And then you're full for the day and you can just go out and explore wherever you want.

I, unlike many people, love the English breakfast.

So just give me some beans, toast, potatoes, mushrooms, tomatoes, and I'm happy.

We'll have to have our own little DIY cooking channel.

We'll turn smart money into smart British cooking or something.

Unfortunately, I don't think we're going to have many subscribers, Sean.

I'm still down.

I wouldn't be a nerd if I didn't ask you, yes, I'm going to put you on the spot.

Did you stay within your holiday budget, especially considering that you had to convert dollars to pounds?

Okay, the conversion was hard.

And because of that, I'm going to say no.

I spent more than I wanted to.

And that's in part because travel is so financially dysregulating.

Like everything is thrown off.

You aren't in your regular routine of like going grocery shopping.

Obviously, you're eating out for every meal.

You're suddenly at a market and everything looks so fun and exciting to buy.

And I'll say one thing that really pushed me over the edge budget-wise was coffee.

Because when I'm home, I drink like four cups of coffee every morning.

It's just so delicious.

And I love a good drip coffee, which is almost impossible to find in the UK.

Everyone loves their flat whites and their cortados and they are good, but I end up buying three times as much coffee as I would otherwise because I need a certain amount and I just can't get that from an espresso.

You're speaking a different language and I always feel like an outsider.

No, I'm not a coffee drinker.

I know, shocking.

Tea is English drink and I'm still an outlier because I do not really drink tea either.

So I am not a hot drink lover, but my mom loves a good cup of tea.

So I have practiced making tea for that reason.

But you know how hard it can be to stick to a budget when you're traveling, right?

It's like you go in with the best intentions.

And then by day three, you're like, whatever.

I basically live in this new country now and I'm going to spend like, there's no tomorrow because I will be gone the day after next.

Look, there is no version of me that is richer than vacation Elizabeth.

Okay.

She has all the money and it grows off of the trees.

So I'm with you.

Every time I come back from vacation, there's always a bit of post-vacade blues that sets in and that's an emotional thing of, okay, now I'm back to the regular grind of just existing in this world.

And then there's the financial part too, where it's like, oh, I just spent how much on meals every single day.

And I have to go buy groceries now.

So I'm going to be doing a little no spend June, even though it is my birthday month.

I'm going to be diligent.

I'm going to be frugal.

I'm going to hope I can stick to my word here.

The reset is so real and so necessary.

We're humans, and sometimes we're going to overspend and go over our budget, especially when we're on vacation.

But I think what you said, Sean, about kind of resetting and maybe having a time where you spend a little less to rebalance your budget can be extremely helpful.

I think this can be one of those 80-20 rules where 80% of the time you're sticking to the principles that you want to financially.

You have some kind of budget.

You know you're making progress on your goals.

Maybe not 20% of the time.

That could be kind of steep, but a certain amount of time, you just let let that be less strict.

You have some more fun with it.

You're more flexible.

You can actually enjoy your spending.

And when else am I going to have a road trip around the UK, having time with my friends, enjoying it?

I think it's okay that I went a little outside of my budget because I know I'm not going to be doing that every single day of my life.

Yeah, and the experiences that you got are invaluable, right?

Yes.

And so are all of the photos I was posting on Instagram.

And we need more.

You guys follow Sean on Instagram so you can see some pictures.

Follow me on Instagram.

Sean Piles on Instagram.

I have lots of photos of my garden, lots of financial tips.

But wait, Elizabeth, I had just had this vacation of my own, but you also went on a trip to St.

Lucia recently.

I want to hear a little bit about that.

I went to St.

Lucia and to date, it is my favorite island.

And I'm not a huge going back to a destination twice, girl, because the world is so big, but it is definitely a destination I'd love to go back to again.

The highlight of it, which Sean was a little shocked when I told him, but I actually went on an ATV tour around a St.

Lucian village and it was incredible.

There were a few moments where I thought I might just tumble off this ATV and roll down the mountain and then I might be dead.

But hey, it didn't happen because I'm here talking to you all.

So

it was incredible.

For the record, I'm all about a fun, beautiful tour of a tropical island.

I'm not about ATVs for the death trap reasons that you just outlined.

Maybe find a safer way, maybe get on a horse or have a little moped moment.

ATVs themselves, not a fan of.

It may be a little obnoxious to say, but I just don't think that's how I'm going to die.

I don't think it's going to be on an ATV or jumping out of a plane like I did in December or ziplining like I did a few weeks ago.

I just don't think so.

You're an adrenaline junkie, Elizabeth.

I'm realizing this about you.

Elizabeth, I hope you have good life insurance for all the crazy things that you're doing with your time.

I absolutely do.

And with nerdy advice, I have term life insurance.

Okay, as long as it extends through whenever your son is done with college, that should hopefully be enough for you.

But still, no more ATV rides, please.

I need you as my co-host.

I want to hear about how you approached your budget when you were in St.

Lucia.

Did you go in with a set amount that you were going to spend or not spend?

Did you stick to it?

I will say that this was my second time being at an all-inclusive, and I never thought that I would like all-inclusives because every time I thought about them, I thought there's just going to be kids everywhere, and everything's going to be super budget.

And I'm a bit of a bougie accommodation traveler.

So, um, but this all-inclusive was great because I didn't have to worry about food, drink.

So all I had to really pay for were activities.

So honestly, I was able to stay within my budget and I didn't spend that much.

And did you have that same little post-vacade blues financial hangover that I described?

I'm still hungover, Sean, and it's two weeks later.

So yes, I absolutely did.

And I've traveled quite a bit this year.

I think I've gone somewhere once every month.

And maybe that's why I feel a little not very grounded.

So I have resolved not to travel for a couple of months because momming and also because just just to stay grounded in my life for a few months.

Save some money.

Yes, that much.

I feel that.

I mean, my spring has been so busy with the move that we're about to talk about.

And I had a bunch of visitors, which was lovely too.

And then this vacation that I'm really looking forward to getting back to basics with my budget.

This coming weekend, I'm planning to dig into it, look at where I can save some money, mostly just by not going out to eat, which is my biggest weakness.

I do have one big expense coming up because I did pre-order the Nintendo Switch 2.

Yes, I'm five five years old.

But beyond that, I don't have a lot of major expenses and I'm hoping I can keep it that way.

I have been doing really good with budgeting because I actually had a no spend February, March, and April kind of.

So I was pretty good at staying within my budget because I know I have summer school expenses coming up for my son, which are huge.

And then I have his tuition coming in August as well.

So not traveling for the summer may be helpful with staying in budget for those big expenses coming up too.

Are there any other ways where after a big big trip or series of trips like this that you find you're able to get back to your basics?

Do you have a budgeting exercise or you just say, I'm tightening my belt, not going out, cooking more meals?

So I'm very much a conscious spender.

So I am very aware when I am.

impulse buying or emotional buying and things like that.

So when I get back from a vacation, actually the blues can make you, well, make me want to go shopping or something, right?

But what I tend to do is get back, first of all, in the routine of cooking.

Cause like you said, that can be extremely hard when you're buying meals, meals, you're being served meals every day, and you have to go back to making your own meals.

How dare they, whoever they is, that's making you cook.

But you're likely to eat so much healthier and so much fresher when you're cooking from home.

And that's what I love: getting back from vacation.

Absolutely.

Finding the things that I love about my life that don't cost any money that I can just do to kind of ground myself, just get back into the swing of things.

I'm looking forward to doing more fun, free things like you described, like riding my bike, meeting up with friends, having little picnics, not spending $100 a night on food and drink like I was in London.

It is expensive.

But worth it.

Yes.

Well, I think we're about ready to get into this episode's money question segment where I take over and ask a bunch of questions about my new life as a landlord.

But before we get into that, let's take a moment to pause.

Listener, take a second and ask yourself where you need some nerdy guidance with your money.

Maybe you want some help planning an amazing international vacation like Sean just had.

Or you want to get serious about saving more money but aren't sure how to do it.

Whatever your money question, we nerds are here to help.

Leave us a voicemail or text us on the nerd hotline at 901-730-6373.

That's 901-730-NERD.

And one of our goals this year on Smart Money is to talk with more of you live on the podcast to help you with your money questions.

So if you want to hang out with Elizabeth and me for a bit and get some nerdy wisdom, let us know.

One more time, leave us a voicemail or text us on the nerd hotline at 901-730-6373.

That's 901-730-NERD.

Let's get to this episode's money question segment where we go deep into how to manage a rental property.

That's up next.

Stay with us.

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We are back and answering your money questions to help you make smarter financial decisions.

And this episode's question comes from me.

Regular listeners of the pod may remember that a few weeks back, I had a question about selling my house.

Well, I have decided to go in a different direction and rent out my place instead.

And I have some questions about the best way to manage a rental long term and whether it's the easy passive income dream that people on social media make it out to be.

And here to answer all of Sean's questions and also some of my own, we have nerd wallet writer Lisa Green.

Welcome back to Smart Money, Lisa.

Well, thank thank you, Elizabeth and Sean.

I am delighted to be back and excited to hear about your new venture, Sean.

Thank you.

Yeah, we've had you on to talk about managing rental properties before, but I've never had so many questions of my own.

So I'm excited to really dig in.

I want to start by hearing a little bit about your story.

So how did you get into this and how many properties do you manage?

I know a lot of people get into having a rental property the same way that you are.

They live in a house and they move out of it.

They keep it and rent it instead of selling it.

And then some people get into it by acquiring a multifamily property, like a duplex or a traplex and living in part of it while they rent out the rest.

For me, it was a little bit different.

My husband and I knew that we wanted to own multiple properties.

We intentionally set out to acquire rental properties in order to build an income stream, especially for retirement.

And we started about 20 years ago.

And so now we're almost finished paying off the mortgages on most of these properties.

I have a couple dozen.

A couple dozen.

I love that.

Since you have a couple dozen properties, you must have learned a lot along the way.

So what do you wish you knew before you got started?

And what are some common pitfalls people should be aware of?

I think most of all, I wish that I had known that I would want to hang on to every property I could get my hands on.

I mean, keeping your former home seems like such a smart move for you, Sean.

Every time I've sold a house, pretty soon I have wished that I had it back.

And we did sell a few.

Flipping houses was all the rage for a while.

And we thought, we could do that.

So we flipped three or four properties.

And yeah, we made a little profit by fixing them up and getting them back to a high standard of quality and then selling them.

But you know, that's a one-time paycheck.

If I had just held on to those houses, they would still be making money for me today.

So I really only see a couple of reasons to sell an asset that can generate money for you.

One is if you really need that money to live on right now, or the other is if you think you can earn even more with that money by investing it in something different.

And neither of those was true in my case.

So I really wish I had held on to the properties.

Your line around wishing that you had had properties you'd sold.

back shortly after selling them really stuck in my mind as i was considering earlier this year what to do with my property because i've had my house which i bought in the pandemic it's in a small coastal town in washington about three hours from Portland, where my partner and I spend a lot of our time.

I've had it for a number of years now, and I really enjoyed my time there, but it was just a little too far away to manage on a day-to-day basis easily.

And my life has been pulling me more toward Portland, and I've been wanting to travel more, and it's not easy to travel from a small coastal town in Washington.

So that's why I was thinking of selling it.

But because I still love the place and I have a 3.125% interest rate on my mortgage, I really didn't want to fully give that up.

So I thought of everything I've ever heard you say around managing your rental properties, Lisa.

And that's what led me to contact a property management company so they can do the day-to-day work for me.

With your properties, do you work with property managers?

Or have you ever done it yourself?

How do you figure that out?

We started out.

by managing our properties ourselves.

And it was a very good learning experience because when you're managing them yourselves, you have to deal with everything.

You have to fix things when they break and the tenant calls you in the middle of the night.

You have to

find a new tenant to occupy the property.

If the tenant doesn't pay the rent, you have to chase them down and get the rent.

And so you really learn a lot by doing this.

However, you also learn that you don't particularly enjoy doing all of these things.

And so a few years back, we did decide to go with a property management company.

And so now they are staffed to answer those problem calls from tenants in the middle of the night.

They find us tenants.

They collect the rent.

So yeah, life has been a little easier for us since we brought a property manager into the picture.

And what's their fee?

How much do they charge you for this?

It kind of depends.

In our area, it typically runs 8% to 10% of the rent.

It's worth it, in my opinion.

I'm paying 10%, or I will, once I have a tenant in my place, because it's still getting ready to live in.

And that to me seems fair.

I do have a question, Lisa.

So I, for a while, during the pandemic, was thinking about buying a multifamily home and living in one side of the home and then renting out the other rooms.

So I'm curious about how it differs in terms of rental property management if you actually live inside of the home.

If you're living in the home, it might be a lot easier for you to manage the property yourself because if the problem were to arise right there next door or in your own property, you are already right there.

So, yeah, if you're living in it yourself, you might want to try it on your own first, see how it goes.

You can always decide later to put it under a property manager.

And can it be an easier way to get started as well?

Because I know I have a friend who got started in terms of rental properties and she felt that it was easier also to acquire a property by making the first one her place of residence.

Oh, yes, very much, very much so.

It is.

the lending rules favor people who are owner occupants and so i think it's easier to get a loan if you're going to be living in the property it's easier to get a lower interest rate or a lower down payment those options tend to be for owner occupants and you can be considered an owner occupant and get that type of mortgage on a property that is a multifamily, like two to four family home, a duplex, a triplex, a quadplex.

And so that can really be a really good way to get started.

You still get the owner-occupant benefits and you also get several doors that you can rent out.

And Lisa, I want to go back to the very beginning when you first got started doing this.

How easy was it to get this going?

Because for me, I almost feel like I'm falling into being a landlord.

It seems like you were more intentional about it.

We were.

And I think a lot of people do get into it by.

falling in the same way that you have.

For us, I think it was easier to get started than I thought it would be.

We drafted a rough business plan.

It wasn't really much to it, but we took it to the bank.

We were looking for short-term funds to acquire the first property.

They looked at our business plan.

They said, okay, they gave us a short-term loan to get started.

The banker actually showed up at...

one of our properties once and found us there with hammer and nails and you know fixing up the house and i think at that point the banker said okay these people are for real they They really are fixing up the houses that they're buying.

They seem legit.

And so after that, it was fairly easy to get the funding that we needed.

So the way we operate it was take a short-term loan, acquire the property, then go in and fix it up, get a tenant in it.

And now that it's fixed up and rented out, it has a higher value than it had at the beginning.

So at that point, I go and look for the permanent mortgage based on that new higher condition that the house is in and get enough money back from that refinance to pay off the original loan and the costs of rehab.

And then your money is freed up to start over.

When you say short-term loan, how short and in what amount?

We usually would get a loan for like a year.

We would ask for enough to pay for the whole house.

Okay.

This made it fairly easy to be competitive when we would bid on the the house because it could be treated almost like an all-cash deal.

Interesting.

I assume that you were using some stellar credit to qualify for these loans.

Having really good credit is very helpful.

Having a home equity line of credit against the house that you're currently living in is also very helpful because that gave us a source of funds for remodeling and updating the house.

And then we could just pay that back once we got the permanent loan.

I'm also curious about the down payment because I know some people who may want to get into rental properties may think that they need a large down payment.

So what was that like in terms of you buying your different properties?

Now, you remember that I started on this 20 years ago, so I cannot swear what it is like today, but we were essentially able to avoid the down payment issue by the method that we used of buying the property at a discounted rate.

upfront with this short-term money and then paying it back later with a permanent mortgage.

When we would get the permanent mortgage, we could get like 80% of the value of the house, but we had added so much value to the house that 80%

of the value at that time was typically enough to pay back everything that we had borrowed previously.

So we really did not have to deal with a down payment.

The challenge for folks trying to get in nowadays is that houses are just so expensive and interest rates are so high.

Have you been able to acquire any properties recently?

And if so, how has it been different from ones you were buying 20 years ago the most recent ones we were acquired were a few years back and we were not able to find like the really good deals that we wanted just off of the realtors multiple listing service the way we used to when we first got started real estate investing was not as big a thing as it is now there weren't as many people competing for the bargain properties and we were just able to pick them up off the MLS.

Now to find discounted properties that would really fit our business model, we kind of need to look at other sources like local investor groups who are tuned into that market who can help us find distressed properties or discounted properties.

And how do you find those groups?

Are they Facebook groups?

They often are Facebook groups, rental associations.

I think probably in most communities, there are more than one in the area where I live.

So we have multiple ones to choose from.

And you'll find different groups in these larger groups.

Like there'll be people who specialize in lending funds.

You know, you can find people there who will help you with that short-term money to get started.

You'll find other people who specialize in finding the bargains, finding the discounted properties.

They don't maybe have the money to buy it themselves, but they can bring you the lead and get, you know, a little bit of money from you for the lead.

And then you can buy the property.

So there's different specialties there.

I've just been scouring Redfin on my phone looking at multifamily housing units in the Portland area.

My partner and I have a plan, maybe a bit of a dream.

We'll see how realistic it is long term, where eventually we might tap the equity from both of our places and go in on something like a duplex, move into one unit and then rent out the other, like Elizabeth was describing before.

And then we would rent out the place that we're currently living in Portland that we've had for a number of years now, as well as my place up in Washington, and then slowly begin to amass properties that way.

That sounds like a great plan.

There's even a name for that.

They call it house hacking.

Buying a property and living in part of it, renting out part of it and building from there.

I'll be a hacker finally.

It just feels like a much more gradual, realistic way to get into it, considering how expensive everything is now.

And the houses that I have seen, the duplexes that I've seen, are not in amazing shape for what I could afford, but maybe I'll improve them myself, much like you did.

The thing about being a homeowner is that whether you like it or not, it ends up making you a handier person than you were before you were a homeowner.

That is very true.

And over time, you learn to look for the right things wrong.

I mean, you don't want the house that has foundation problems and is starting to slide down the hill.

Yeah, no.

But I remember one property that we bought and it had a roof leak.

And the roof leak had damaged the ceiling in the main bedroom.

And the ceiling had collapsed.

So there's insulation and drywall debris and asbestos, maybe.

Yeah, from the all over the floor.

okay so most people would come in and look at that and like scream and run away right they don't want any part of that this looks terrible

among those people and we looked at that and we said okay it's not that difficult to fix the roof patch the ceiling and clean up the floor and so we were not afraid of this house that looked like a disaster we ended up getting that one and that one was a good deal for us in this case difficult is going to be relative because what doesn't doesn't seem difficult to you, to me, I'm thinking there's no way in heck I'm going to be messing with that at all.

Because when I hear water damage, I think, where else has it gone?

Is there mold?

Do you have to remediate anything like that?

You probably pull up the carpet and kind of peek underneath it before you buy to see how extensive the water damage is.

But you can also get help.

You know, you can get a home inspector.

to help with these kinds of things.

If there's a roof leak, you can get a roofer to fix it.

You don't have to climb up there yourself.

So when in doubt, hire someone.

Yeah.

So I'm going to pivot a little bit because I think the main driver for me when I was interested in, and I'm not zero on, you know, having a rental property, still curious, but I think the main driver for me was passive income.

And I'm curious about what it means to earn passive income from a rental property because passive income is actually just a category of income to the IRS, but it doesn't necessarily mean that there's no work involved, which is where maybe some people get it wrong.

So can you talk about how much work you actually put into your properties on a regular basis?

Yeah, you're right.

The IRS considers this to be passive income, sort of in the same category of like saying owning and trading stocks or whatever, as opposed to income from a job.

But you're right, there is still some work involved.

And I think that you have some latitude to how much you want to do that work personally versus how much you want to hire experts to do it for you.

So if you manage your property yourself, there's definitely work involved.

You have to maintain the property.

You have to collect the rent.

You have to find the tenants.

If you hire a property manager, then your income really does become more passive to you because the property manager can handle all those things.

For me these days, I still spend several hours a month on record keeping, making the mortgage payments, that sort of thing.

We also stay in touch with the property management company, especially on any decisions about major expenses like replacing an appliance or repairing a roof.

They would consult with us if anything like that came up.

And then sometimes for certain properties, we've still been actively involved in property maintenance.

With a property manager, it's largely our choice.

whether we want to be involved at that level or not.

But since we're talking about taxes, be aware that personally participating in the work can have tax benefits for you.

There are several different tiers of participation in the IRS rules from active participation to material participation to being a real estate professional.

And each one of these tiers has its own tax rules.

And as you can imagine, when you're dealing with the IRS, the qualifications aren't always straightforward.

But in general, more participation by you equals more favorable tax treatment.

So there is at least a reason for you to keep records of the amount of time that you spend.

I'm hoping to spend almost no time maintaining my house because the whole thing is I want to get away from that or a place that's a few hours away from where I'm actually living.

But I want to go more into taxes because that's a concern that I have is that having this new stream of income, even though it's not going to be tremendous, it will basically cover my mortgage and maybe a couple hundred bucks more than that.

I'm a little worried that it's going to completely throw my tax situation into a tailspin.

I'll end up owing a bunch of money and I might have to keep even more meticulous records than I already have.

How do you manage the taxes on your properties?

Because I'm considering hiring a CPA who's a pro in rental properties just to make my life a little easier on this front.

I think that's a great idea to hire the pro who is an expert in rental properties and they can show you what you need to do in terms of record keeping.

If you're working with a property management company, they probably handle most of the record keeping and send you a monthly statement that shows all of the expenses and income that you have.

And so that makes it easier.

And for many people, when you're starting to own investment property, rental property, it actually benefits you on your taxes.

because tax law allows you to depreciate the value of the property over time.

Not all of the property, the land doesn't depreciate, but like you can depreciate the value of the building over time.

And so that's a tax write-off for you, even though you're still getting the money in your pocket.

So for the first 10 years or so that we owned rental properties, we would show a loss on those properties every year.

even though our cash flow was positive.

And we were able to write that tax loss off against our regular job income and reduce our taxes.

The trade-off there would be that if and when you go to sell the property, if you have been depreciating it, you'd have a lower basis and you may not be able to get as much in the sale, correct?

Yes, you'd have to pay a higher tax when you sold the property.

But hey, I'm not going to sell my properties.

What do you mean?

That's the whole point is to not sell.

What am I thinking?

We know, Lisa.

You don't want to sell anymore.

You want to keep as many as you can.

Exactly.

Exactly.

Okay.

And be aware that your ability to write off your losses against your regular job-based income depends on your situation.

So this may not apply to everybody.

It depends on what tax bracket that you're in and your level of participation in the property and other factors.

Just be aware of that.

One last big thing I want to talk with you about is that I'm considering starting an LLC, a limited liability company, to manage and own my rental property.

Did you go this route and why or why not?

I have considered that as well.

I have not done it yet and I still might.

I think there's some definite advantages of an LLC,

especially the ability to shield your other assets from any judgment that arises from one of your properties.

There's also some disadvantages.

It costs money.

It means more paperwork.

And you have to follow some really specific rules.

If you don't follow the rules, then anyone who has a judgment against you can, what they say, pierce the corporate veil and come after your

assets.

Anyway, I happen to live in a state where LLCs can be expensive.

So a lot of property owners where I live will tend to get a big umbrella liability insurance policy instead of going the LLC route.

Yeah, because the main appeal for me is limiting my own liability.

If something does happen on the rental property to the rental rental property and the premises there, it's the LLC's problem and my personal finances would be shielded.

The potential downside that I've seen so far is that my lender will have to approve moving the title of my mortgage to the LLC and they might want me to refinance to do that, which would mean giving up my super low interest rate.

And I'm not inclined to do that.

Don't

do that.

Going deeper into the idea of different types of ownership for a rental property.

I know that some people will opt to put their properties into trusts rather than owning them in their name or putting them in an LLC.

Is this something that you've ever considered for your properties?

And what are the benefits of it?

Absolutely.

I think that one of the biggest benefits of a trust is to ease the transition to your heirs when you're gone.

Because anytime that you move ownership of property from one person to another, a lot of paperwork is involved.

Everyone who's ever bought a house can tell you about that huge stack of papers that they have to sign at the attorney's office.

A trust lets you take care of that paperwork now

instead of just leaving that burden on your heirs.

So yes, I do favor a trust for that purpose.

And I've started the paperwork to move my properties into one.

Well, this has been really helpful, Lisa.

Do you have any final words of wisdom for me or Elizabeth or others who might think about taking on rental properties and becoming a mogul like you one day?

Oh, well, thank you for that, Sean.

And, you know, I will say I'm getting close to the stage when the mortgages will all be paid off.

And that is sweet because thousands of dollars a month that have been going to lenders will finally become income to me.

So, you know, my advice is pretty similar to what you would hear for any other type of investing.

First of all, start young if you can to allow plenty of time for growth and to get those mortgages paid off.

Second, make wise purchases.

Buying an overpriced property is not likely to be a winner for you.

Number three, I would say hang on to that low-cost mortgage.

And then finally, I would just say stick to your strategy.

You just keep building your portfolio in a slow and steady manner, and it's going to pay off in the long run.

And that's all we have for this episode.

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