Why Most Rental Investors Lose Cash Flow: Know Your Numbers Before You Buy

Christopher Seder (00:00)

You know, when you make the old saying you make profit when you when you buy the house, which is 100 % correct. But you also need to know not only what you bought it for, but OK, what’s it going to cost me? You know, what’s the interest rate? What’s you know, the payments going to be? What’s

what all of that stuff, what is material and factoring all that in is super, super important. I think, and I don’t know exactly, but I think that’s where a lot of real estate investors go wrong, especially on the rental side. There’s so many factors that are unforeseen that if you buy a rental property wrong, so many things that can just kill your cash flow.

Scott Bursey (02:16)

Welcome back to the Real Estate Pros podcast powered by Investor Fuel. I’m your host Scott Bursey. And today we are bringing a series injection of longevity fuel into your real estate empire. For over 15 years, our guest has been mastering the dual strategy playbook, flipping houses for profit and building generational wealth with rentals. Christopher Seder a big sky property isn’t just in the game. He’s a proven Titan.

Get ready, pros, because Christopher is here to show us how to build a true real estate business that doesn’t just survive market shifts, but thrives through them. Christopher, welcome to the show.

Christopher Seder (02:53)

Hey, thanks for having me.

Scott Bursey (02:54)

It is truly awesome to have you here on the Real Estate Pros podcast today.

And for our listeners who may not be familiar with your journey, please tell us how did your career begin and what is your main focus now?

Christopher Seder (03:07)

Yeah, absolutely. So I started out 15 years ago, feels like forever back in 2011. I got started because I graduated college. I really didn’t know what I wanted to do. My father had actually been in real estate investing for since the early eighties. So he kind of got me excited about that. It took me a couple of years where I went to conferences, started learning. And then finally in 2011, bought my first rental property.

And from there, just built it up, did a couple of wholesale deals and then ended up finding my niche, which I loved rehabbing, transforming houses. So over the next few years, I did a couple of rehabs and ended up building it up to where, you know, I was doing multiple rehabs a year. And that’s kind of where it started. And I’ve consistently done rehabs for the past 15 years, every year doing

you know, not huge numbers, but doing three or four rehabs. There was a couple of years where I think I did 10 and I found that, you know, that was just too much for me. I liked more of the mobility of ⁓ being smaller. So I’ve consistently done that and, you know, along the way acquired 26 rentals, slowly built those up and kind of built it into what I have today.

Scott Bursey (04:26)

That’s incredible. I love the consistency factor. What really caught my attention about you was the way that you’ve been able to master the two essential engines of real estate success. Generating quick capital through high speed flips while, you know, simultaneously building massive long-term equity through calculated rental acquisitions for 15 years. That consistent dual track success is pure fire.

Christopher Seder (04:49)

Yeah.

Yeah, yeah, it’s been, it’s been good. It’s, I mean, it’s been a lot of work over the years, but being consistent in the business, I think if you want to have a long-term business is key. And I mean, it comes down to, you know, starting out finding deals. You got to be consistent in finding deals or have some sort of proven way that you can go about finding those. in my market, you know, I found

What works for me is usually vacant houses and postcards and things like that. If I ever need a deal at this point, just go look for some vacant houses or go send off a couple thousand postcards and get a deal.

Scott Bursey (05:38)

That’s awesome. Christopher, it’s time to fuel up. What is the strongest competitive advantage Big Sky Property gains from executing both flips and rental acquisitions at the same time?

Christopher Seder (05:43)

Okay.

I think one of our strong advantages, at least in my market, you know, I’m in Montana. So it’s a little different than the rest of the world, than the rest of the country, I should say. But our strongest advantage is just being consistent over the years, you know, being in this business for 15 years. People in the community know who we are. They know what we do. They know that, you know, we…

We close on the property if we put one under contract and being consistent with not only buying houses over the years, people seeing that and consistent with our word is huge where the community sees what you’re doing and people know if you’re a good or legit business. So that’s been strong, get a lot of referrals from people wanting to sell a house, us to buy their house because

of the good reputation in the community.

Scott Bursey (07:34)

That dual approach gives you serious market intelligence and options when the economy shifts as well. And I know it’s shifted the last six years for certain in the Montana area. You you’re never boxed in when you have those two options.

Christopher Seder (07:47)

Yeah, yeah.

Yeah, yeah, it’s been Montana has definitely changed since 2020. Our house, our the house prices in Montana have essentially doubled, at least in the Billings area since 2020. Material prices have gone up. All everything is has gotten more expensive. Where, you know, pre 2020, we were buying houses, 90,000, 100,000, 110,000, selling them for under 200,000 pretty consistently. And then

Once 2020 happened, know, interest rates, was more competition and house prices just shot up like crazy. now we’re buying, know, 175 to 185, 200,000. We’re selling them for, you know, 300 or more, but you know, it’s, it’s gone crazy and it’s gotten harder.

Not for the flipping side of the business, that’s still been consistent the past six years. The harder part is finding rental property in Montana that’ll cash flow. It’s just the numbers aren’t working out like they did before. Before you could find some good deals that would still cash flow, but with the rising costs of everything, of house prices, of interest rates, of taxes, insurance, everything has kind of raised it where…

Single-family rentals don’t necessarily make sense on paper to purchase as long-term rentals in at least my area. I know other areas, you can still find some of those, but here it’s a little trickier.

Scott Bursey (09:23)

It’s really getting a handle on those numbers and understanding those numbers and then pivoting and making the necessary adjustments, isn’t it?

Christopher Seder (09:31)

Oh, definitely. Yeah, that’s one thing. And even even way back when I’ve always preached to people and I’ve always had it kind of ingrained in me is know your numbers.

You know, when you make the old saying you make profit when you when you buy the house, which is 100 % correct. But you also need to know not only what you bought it for, but OK, what’s it going to cost me? You know, what’s the interest rate? What’s you know, the payments going to be? What’s

what all of that stuff, what is material and factoring all that in is super, super important. I think, and I don’t know exactly, but I think that’s where a lot of real estate investors go wrong, especially on the rental side. There’s so many factors that are unforeseen that if you buy a rental property wrong, so many things that can just kill your cash flow.

It even can happen when you buy a rental, right?

Scott Bursey (10:29)

And on that note, Christopher, very interested to know what specific type of property, you know, be it small, multifamily, single family home offers the greatest on tap profit opportunity for a flipper.

Christopher Seder (11:18)

For a flipper, at least in my market, like I kind of said, where single family houses just on paper aren’t cash flowing. ⁓ The best opportunity I see in my market is probably multifamily. Maybe not huge multifamily, but 10 to 20 units. are a lot of those types of properties out there that they might look a little run down, maybe need a little repair.

And a lot of those, the landlords, they’ve owned them for 20 some years where, you know, they’ve now seen a lot of appreciation and they’re getting to the point where, okay, I’ve got some appreciation, let’s cash out. And a lot of them don’t owe anything on a property. They’re starting to get a little rundown, wore out. They haven’t been keeping up with rent. So I think there’s big opportunity there to buy.

you some of the smaller multifamily properties. And the big thing is, you know, once you do look at them, you know, just run your numbers, run everything out and just make sure it cash flows and make sure it makes sense as a good deal, just like on, on everything.

Scott Bursey (12:27)

That focus on a specific market segment is how you unlock hidden value. The Sharp Pro knows where the market is over discounting.

Christopher Seder (12:37)

Yeah, yeah, definitely.

Scott Bursey (12:39)

And you know, you’ve been in the game for 15 years and I know you’re going to have an impact for a long, a much longer time. What is some long-term vision?

Christopher Seder (12:49)

Some long-term vision really for my business is I definitely want to acquire more rentals, ⁓ grow that side of my business. And I think the opportunity is in those 10, 20 unit apartment complexes, or I don’t know if they’re considered apartment complexes, but multifamily complexes. Yeah, I don’t see myself retiring anytime soon.

But yeah, eventually get there. But I think it’s just build up the rental portfolio more and stay, stay consistent with it. Stay consistent with, with flipping houses too, because flipping, you know, you make good money. can build up capital that you can use as down payments for the rental properties as, you know, ways to grow your business. I think that’s where it is where rental property, can eventually cash flow enough where you.

you can live off the rental income, but there’s still risk there with a couple bad renters and can destroy some cashflow for a year on that property. But I think that’s where I’m heading with my business and continue to grow it. the long game, it’s not one of those, real estate is not a, I’d say, get rich quick thing. It’s more of get rich over a long period of time.

Yeah, I’m getting there.

Scott Bursey (14:11)

It really is more than a business. becomes a hobby, doesn’t it?

Christopher Seder (14:15)

Yeah, yeah, even more than a hobby, it’s a love. I’ve been addicted to it for 15 years now. I’m still addicted to, and I still absolutely love seeing our flip properties, you know, transformed from just rundown, ugly, something that smells bad into something absolutely, absolutely beautiful that a family comes in and falls in love with. Still absolutely.

you know, love that part of the business.

Scott Bursey (14:43)

After 15

years, what is one key lesson you’ve learned about tenant quality that newer pros often overlook in their rental acquisitions?

Christopher Seder (14:52)

Yeah, tenant quality is always tough. But I would say for me, it’s always going about my gut feeling on the renter. You know, go through applications, go through all that fun stuff with pre-screening renters. And you can really get, you can get somebody that looks amazing on paper. But you know, you might meet them in person and you just get a funny feeling.

something off about them. So going with that gut and is really important to me. I like to meet all my renters, ⁓ you know, make sure they’re good people and you just get a good feeling about them because they’re living in your property. They’re taking care of it. They’re maintaining it. So you want to make sure to put in a good solid person. And of course, you want to make sure they tick all the boxes on paper.

you know, income credit, make sure they can afford the place and have good rental history. You want somebody that, you know, they’re not getting evicted every year or kicked out of a property.

Scott Bursey (15:58)

If I’m hearing you correctly, the two combined, you know, you want to have all the boxes checked, obviously, but also that intuition, ⁓ personal touch, if you will, seems to play a pretty big role in your philosophy.

Christopher Seder (16:53)

Yeah, definitely. And that it plays a big role in not only my rental philosophy, but you know, on the flip side, when hiring contractors, when hiring, you know, electricians, whoever you’re hiring to work on the property, you kind of got to have that intuition. Okay, is this guy going to show up for work and actually do the work? ⁓ You know, being in the business long enough, I’ve gone through a lot of contractors over the years, a lot of

good and bad people and you just gotta have good instincts in this business and you gotta trust people in some regard but you also, you know, always have to be a little weary every relationship you go into.

Scott Bursey (17:36)

It really is a weeding out process and that was broken down. Excellently Christopher. This is the money question. So let’s rev up the engines. It’s time where you supply the high octane fuel for a pro who’s been successfully flipping five to 10 houses a year, let’s say, and buying a few rentals. What is the best system or mindset shift they need to implement?

Christopher Seder (17:45)

Okay.

Scott Bursey (18:01)

to jump from being a successful operator to building a seven figure real estate business.

Christopher Seder (18:08)

This kind of goes back to, for me, for my business is being ⁓ consistent in everything that you’re doing in your business. It’s really just, you know, not slacking. And I can’t say I’ve always been perfect, but it’s, you know, consistently finding deals, consistently, you know, managing a project, just being consistent in every…

phase of a real estate investing business is going to be so, so important, you know, having for me, it’s having, okay, this is what I have to do on my real estate investing business every single day, every single week, every single month. And from there, you know, it’s, you know, those slow little things that you implement every day, they, add up over 15 years and, and that’s really

Really, I think the key to success, I see a lot of people and I know, you know, maybe months at a time, you’re not consistent. Maybe you get lazy and you’re not going out and finding real estate deals, which for some businesses, that’s the lifeblood is always having real estate deals. And the ones that make it over the years are the ones that are consistent. You have consistent.

income coming in, consistent deal flow, consistent projects to work on. So that’s really, I think, key to business and real estate in general.

Scott Bursey (19:34)

and to life in general too, getting up in the morning, know, and applying yourself. How can I have an impact today that is so vital? Thank you for that valuable insight as well. What is some of your ⁓ maybe short-term vision as well?

Christopher Seder (19:37)

Yeah.

Short-term vision, I would say.

It’s hard to say it’s really just staying consistent with rehabbing houses, with keeping up with the rentals is kind of the short-term goals. I have a flip closing Thursday, which will be nice. Get that one out and money back in the bank from that one. But it’s really just consistently, you know, buying those properties and then

jumping on opportunity. You know, my long term is to buy more 10, 20 unit properties. So it’s, it’s as those come up, put myself in a position where, you know, I can, can jump on those deals when I, when I find them. So that’s kind of the, the short term having either the, the capital to be able to acquire them or, you know, if we’re go with a private lender, having, making sure, have those relationships in, in place where,

I got this deal, would you be willing to fund it? So that’s really the goals for the next, I’d say, year or so is stay consistent, build this up. Some other goals, I know I have a couple rentals that I want to sell off on contract for deeds, which, know, a couple of free and clear rentals that I think there’s an opportunity there where I sell them off on a contract for deed to…

to somebody, then I get rid of some of those headache expenses of maintenance of taxes and insurance and just have that consistent cash flow coming in from them for the next 10, 20 years.

Scott Bursey (21:27)

If I’m hearing you correctly, execute daily will achieve your long-term vision.

Christopher Seder (21:34)

Yeah, absolutely. Yep, you have to be every day doing something to push your real estate investing business or your goals forward. ⁓ You know, a lot of times I get stuck, stuck working in my business, sometimes more than on the business, but it’s so important to work on the business and, you know.

do the steps to propel it forward as opposed to just staying in one place.

Scott Bursey (22:01)

Absolutely. Christopher, you’ve supplied so much great information, advice to our listeners today. Do you have any additional golden nugget or two or any additional advice you’d like to pass along to our listeners?

Christopher Seder (22:13)

Yeah, I guess I would say, you know, wherever you’re starting out at, if you’re just a brand new real estate investor, you know, get educated, learn from other real estate investors in your market. I’d say that was one of the biggest things. How I was successful, was early on, you know, having a mentor who could kind of help me out and having good people.

There was a lot of good people in my own market that were experienced real estate investors that kind of took me under their wing and showed me how to do this, to flip a house, how to buy a rental. So I would say, learn from other people. I’m going to our real estate investors club meeting tonight and find one of those networking events in your area that you can talk to these people and don’t be afraid to ask them questions.

You know, I personally, love when people ask me questions, I love, you know, throwing out knowledge that I’ve learned over the years. Half the time, I feel like I’m just talking ⁓ and not exactly even remembering all the stuff that I went through. But once I get started talking about it, I realize, my God, this happened here. I learned this on this project.

There’s so much knowledge there and there’s so much knowledge in, you know, your even local community that you can learn from.

Scott Bursey (23:39)

Christopher, that was ⁓ just an awesome breakdown. And for our listeners that want to follow your journey or collaborate with you, what’s the best way for them to reach you?

Christopher Seder (23:49)

Yeah, I’d probably say Instagram or ⁓ maybe even YouTube or Facebook. You know, just search my name, Christopher Seder , and you’ll find me on there. Follow me on Instagram. I’ve been posting a lot of the projects we’re doing. ⁓ Been posting right now one of the, just had a renter that was with us for eight years, just had moved out and, you know, left the property pretty rough. So I’ve been posting about, you know, the

the remodel of just a little two bedroom apartment. It’s kind of fun to do and it’s fun to see real actual projects going on. So yeah, follow me on Instagram.

Scott Bursey (24:27)

Awesome, and I most certainly am. Thank you, Christopher, for being here today. This has been an absolute pleasure.

Christopher Seder (24:33)

Yeah, absolutely. Thanks for having me. It’s been a lot of fun. I appreciate you guys and you guys let me come on and talk about what I’m doing.

Scott Bursey (24:40)

And to our listeners, we appreciate each and every one of you. If you got value from today’s episode, please subscribe. We’ve got a lineup of exceptional guests, just like Christopher Seder , who are making huge moves in the market. Until next time, keep your standards high and your vision clear. We’ll see you on the next episode, everyone.