Tax attorney, Brian Boyd, is a real estate investor who has amassed a growing portfolio of 18 short-term and long-term rentals. His new book, Replace Your Income, is for aspiring and beginner real estate rental investors who want to build wealth. Our own Charlotte Davis had a chance to sit down with Brian to get his responses to important questions about investing in real estate.
Charlotte Davis: Who specifically did you write Replace Your Income for?
Brian Boyd: Initially, Replace Your Income was simply an outline I used to discuss real estate with clients. Once I had used it enough in those first several meetings, it morphed into an FAQ. That FAQ then became a jumping-off point for clients to delve deeper. Thus, the need for the book really became apparent. I wanted to demystify the real estate investing world by walking clients through the entire process. Many people who buy the book are professionals in their own businesses, and they have other goals, such as building generational wealth, contributing to their financial independence, providing a home to those who cannot afford to buy—or who choose not to, or they want to create their own legacy and leave the world better than they found it.
Charlotte Davis: When did you first get into real estate and why?
Brian Boyd: I got into real estate in 2017 after I sold a coin laundry. Being a lawyer in the area, my practice requires time. I needed to figure out how to make money when I wasn’t working. That thought led me to short-term rentals and then to long-term rentals. In only eighteen months, I amassed a growing portfolio of the rentals mentioned and figured if I could do it, I could share this information with others and help them create their own wealth. Being a tax attorney was a big added advantage as I was able to share a great deal on the tax benefits that come with owning real estate.
Charlotte Davis: How does one decide what kind of real estate to invest in?
Brian Boyd: Choosing the type of real estate to invest in requires two important considerations:
- Your level of risk tolerance and
- Your level of desire
To determine your risk tolerance, consider the following:
Analyze your current financial position and secure the necessary funding. Take into account your current income, assets, and investments when determining how much capital you can afford to commit to a real estate investment. 2. Understand the degree of volatility with different types of investments. Understand that some investments may take longer to appreciate in value or require more effort from you than others. Additionally, understand that some investments will carry greater levels of risk than others. Determine which type of investment fits best with your individual risk tolerance level before making a final decision. 3. Don’t forget to factor in potential returns as well when considering risk versus reward scenarios for investing decisions. A good rule-of-thumb is that higher levels of initial investment often lead to higher levels of return later down the road if managed properly – so don’t be afraid to invest aggressively when appropriate, but do so carefully.
But even more important, you need to really evaluate your level of interest. After all, a large part of successfully investing in real estate requires dedication and motivation. Here are a few key questions to ask yourself when considering getting into real estate investing: 1. Are you willing to do the research necessary to make successful investments? 2. Are you comfortable with taking on additional risks that come with investing in real estate? 3. Do you have enough capital (or access to capital) to cover any potential losses during times of instability? 4. Can you invest both time and money into researching potential real estate investments? 5. Is your mindset one of exploration and calculated risk-taking, or are you more conservative when making financial decisions? If your answers to these questions are yes, then it’s likely that real estate investing could be the right fit for you. Remember, there is no “right” answer—only what works best for you!
Those two factors will inevitably illuminate the path for any investor.
Charlotte Davis: What should you have in place before you jump into real estate investing?
Brian Boyd: Before you start investing, you need to know your finances inside and out. The numbers will tell you everything you need to know about your investments. But before you make any money moves, you’ll definitely want to speak to your accountant and your attorney. Once you have done that, and this may seem obvious, but in order to build up a down payment for an investment purchase, or to afford any repairs or upgrades in your properties, or even to ride out months where your tenants don’t pay, you need to have savings set aside. To build that up, you should have a budget you’re using to guide all of your purchases. With a budget, you can monitor how much you’re spending, on what, and how your expenses are trending (up or down). Ideally, you want to get to a point where you have between three and six months of expenses set aside to cover household expenses if you suddenly lose your job or have a big unanticipated expense.
Additionally, it’s important to make sure that your credit score is in good shape – lenders will want to see a score of 680 or more before they approve financing. Finally, ensure that you have enough cash reserves available to pay for things like property taxes and repairs on the properties you purchase. With the right preparation, you’ll soon be ready to start investing in real estate with confidence.
Charlotte Davis: How should one determine a good investment strategy? What should they consider?
Brian Boyd: I’m a big believer in not biting off more than you can chew. Pick one property that is in decent shape, can achieve solid returns for rent, and is nearby. Turnkey properties are available through many different companies, but no one cares about your money more than you do. This is an investment so pay it the attention it deserves. Having a first property near where you live will teach you more than any college degree program. If I’m coaching someone, I’ll tell them to find a city they like, don’t buy a property that doesn’t achieve the 1% rule (1% of the purchase price in rent each month), and self-manage it for the first year.
Charlotte Davis: Is it necessary to have a team of experts working with you, and if so, what are their roles?
Brian Boyd: Yes. Without a doubt, you need to have a team in place, including: An accountant/bookkeeper, a banker, an insurance agent, a lawyer, a real estate agent, and a handyman are all critical. Here’s why:
An accountant or bookkeeper is an essential member of any real estate investment team due to their ability to handle and keep track of the financial aspects of the transaction. They provide invaluable insight into the finances needed to make sure that investment decisions made by the team are backed up by accurate and up-to-date information. By having the knowledge and expertise needed to manage funds, an accountant or bookkeeper will ensure that investments are wise, taxes are correctly paid, and profits can be maximized. Without such professionals on board, managing a real estate portfolio would be extremely difficult and time-consuming.
Having a reliable and experienced banker ensures that your financial decisions are sound and that you have access to the necessary funds to make smart investments. A good banker also has deep knowledge of local real estate markets, which can be invaluable when it comes to finding the best deals and making informed decisions. Lastly, having a good banker on board can help you take advantage of potential tax benefits associated with real estate investments. In short, a competent banker is an integral part of any successful real estate investment team. Personally, I have several bankers, and each has a unique niche that helps in my investing.
An insurance agent is an invaluable member of the team because they can provide essential guidance and advice on what kind of insurance coverage is best suited for a particular property or investment, helping to protect the investor’s finances in the event of unforeseeable events. Insurance agents can also help to ensure that necessary repairs are made to the property and that all purchases are covered under appropriate liability policies. In short, an insurance agent provides security and peace of mind for a real estate investor – making them vital in any successful investment strategy.
Having a lawyer helps ensure that you make sound decisions that are legally compliant. A lawyer’s expertise can be invaluable in helping to craft contracts, advising on any changes to law or regulation, and ensuring that all parties involved understand and agree to the terms of the deal. Lawyers can also use their experience to identify any potential risks or issues related to a particular deal, providing an extra layer of protection for investors. Ultimately, a lawyer’s presence helps reduce the risk associated with investing in real estate and provides peace of mind for everyone involved.
A real estate agent on your team is important because they provide invaluable insights into local markets, trends, and potential investments. Real estate agents understand the dynamics of a given area and can help identify opportunities that investors might not have considered. They can also act as a liaison between investors and other parties to negotiate the best deals on behalf of their clients. Furthermore, real estate agents are well-versed in the legal aspects of purchasing property, ensuring that all documents are in order before a sale is finalized. All in all, having a real estate agent on your investment team can be an invaluable asset for businesses seeking to grow their portfolios.
Handymen are crucial players. They make sure that investments are well maintained and that any needed repairs or upgrades are taken care of quickly and efficiently. Handymen can fix leaky plumbing, repair broken appliances, rewire electrical systems, weatherproof windows and doors, paint walls, lay tile and more. In addition to ensuring that a property is safe and functioning correctly, they help maintain the value of an investment property by keeping it in good condition.
Charlotte Davis: Is now a good time to get into the real estate investing game? Why?
Brian Boyd: Now is the best time in over a decade to get into real estate investing. The market is cooling, but demand for affordable rent properties is at an all-time high. If anyone was looking at the stock market, this would be the dip they have been waiting for. Now is the time to jump into the real estate investing world.
Charlotte Davis: Should you rent properties or buy them to “flip”?
Brian Boyd: I’m not a flipper. It’s not my specific area of investing. I don’t have a crew of subcontractors to help with a flip. I’m a long-term buy-and-hold investor. I enjoy the cash flow and the appreciation of the asset. I believe wealth is made over time and not overnight.
Charlotte Davis: How can you be sure a rental property you’re considering buying is a good deal? What should you look for?
Brian Boyd: Run the numbers on the purchase price versus the potential rent for the area. How is the neighborhood? How are the schools? Crime? Is the house in good shape? These are the questions you should ask of any deal.
Charlotte Davis: How do you know what the potential return might be?
Brian Boyd: There are several formulas used to determine what your return should be. However, a very useful tool that anyone can access is www.DealCheck.io. This website is user-friendly and helps you analyze a deal within minutes. My law partner uses it daily to help him decide when to make an offer on a property. I like it for quick analysis of all the intricate details it offers, e.g., taxes, HOA fees etc.
Charlotte Davis: How is your business going, Brian, and how long did it take for you to be profitable?
Brian Boyd: Our business is going well. We were profitable in our first year and replaced my wife’s income this past year. I believe in the next 1-3 years, my wife will step away from her full-time job to run the company full-time.
Charlotte Davis: What mistakes should people avoid?
Brian Boyd: Don’t be impulsive. There is always another deal. Don’t get emotional about a particular property. Many people think that they have to buy this particular property or that one and overspend. Don’t do that. Stick to your budget and be disciplined about your investing.
Charlotte Davis: Can you really replace your income?
Brian Boyd: Yes. We replaced my wife’s six-figure income- and that was during the Covid pandemic. Imagine what you can do during a return to normalcy!
About Brian T. Boyd, Esq.
As a lawyer in Nashville, Tennessee, Brian Boyd helps clients with real estate, construction, and business matters. It is with that knowledge that he and his wife, Dawn, have grown their portfolio to a six-figure income. Brian earned his BA from the University of Tennessee—Chattanooga, a JD from Samford University’s Cumberland School of Law, and an LLM in Taxation from Georgetown University Law Center. When not practicing law or working with Dawn on their real estate ventures, Brian can be found on the Brazilian Jiu-Jitsu mats at his local gym. His newest book is Replace Your Income: A Lawyer’s Guide to Finding, Funding, and Managing Real Estate Investments.
This article was originally published on Real Estate Today.