Why Focus on Cashflow? Building a Profitable Rental Portfolio with Ryan Stotts

Episode 7

Logan talks with successful investor Ryan Stotts about how he's achieved financial freedom through real estate and how you can do the same.

What does real estate mean to you? To Ryan Stotts it means financial freedom.

Ryan is a successful real estate investor with over 25 years of experience in the industry. Early on in his real estate career he tried a variety of different investment strategies, from house hacking to car parks. It wasn't until years later that he really started focusing on the numbers.

What he found was that the property type that was most profitable for him was multi-unit long term buy and hold residential rentals. But whichever strategy you employ, he says, "It all comes down to the maths. If it's a solid property, the numbers work out then you'll have options down the line."

The best way to focus on the numbers is to find the right tools. Ryan's been a Landlord Studio user for over six years, finding the app when it was still called Property Buddy. It has proved essential in allowing him to narrow his focus, stay on top of the numbers, and grow his portfolio.

How Important Is Focusing When Investing In Real Estate?

Ryan went on to say "There are opportunities in any market you want to look at... but if you're too spread out, that starts to take a toll, that can take down your business."

It's this level of focus that he attributes to his own success. It's easy to get distracted by new exciting opportunities. But, by mastering one form of investing and then "rinsing and repeating," as Ryan explains, he was able to avoid many of the pitfalls and potential issues that come with exploring a new investment strategy.

How Many Units Do You Need Before You Can Become A Full-Time Real Estate Investor?

For Ryan, the answer to this question all comes down to cash flow.

We've spoken with a lot of investors over this season of the Profitable Rental Podcast. Each have employed different strategies, with different focuses and goals. Some focus on rapid growth expanding fast and leveraging hard to grow their portfolio as quickly as possible. Have a listen to episode 3 with Christian Osgood who, in an impressive display of creative financing and strategic deals, built a portfolio with his business partner of over 100 units in less than two years.

However, all of them agree on one thing, and that's the importance of stayng on top of the numbers. Ryan explains how by focusing on cash flow rather than growth he was able to make the move from corporate America to full-time real estate investor with around 15 units.

"If investor A has 100 units," he says, "and is making $100 per units that's great, that's $10,000 a month in income. However, investor B could have 20 units but if they're making $500 a unit, that's the same $10,000 a month."

What Risks Should New Investors Be Wary Of?

Real estate comes with inherent risk, whether that's personnel risks, market and financial risks, or tenant management challenges. This can be off-putting for new investors. There's nothing more concerning than the unknown.

"It's all about managing those risks. Have a plan, have a strategy, have exit plans and keep your options open," Ryan says. He goes on to explain that having the right team in place also plays a pivotal role. Each team member will bring different expertise to the table and help you find solutions.

He then explains how having the right software, and making sure you stay on top of your numbers is essential if you want to achieve your financial goals. "Running your reports, having that visibilty, so that when things come up you can quickly figure out how much repair costs are, compare properties A and B, and as you invest moving forward you can get more dialled in with the numbers," and make the best decisions down the line.

"There are so many factors in real estate working in your favour," he says. But if you don't stay on top of your numbers, don't have the right systems you can't leverage these factors to increase your profitablity.

About Landlord Studio

Landlord Studio is the leading property management and accounting platform on the market with over 40,000 properties currently managed on the system.

Manage every aspect of your portfolio, from real estate bookkeeping and accounting to online rent collection. You can even automate late fees and rent remnder emails, collect tenant payable expenses online, store documents, manage property maintenance, screen tenants, generate reports and more.

Plus, our plans start at free. View pricing plans →

Don't miss the next episode

The Profitable Rental is a podcast by Landlord Studio. We interview real estate experts and discuss practical advice on how you can build a profitable real estate portfolio.

Stay tuned for the next episode where we’ll get stuck into even more tax strategies for landlords to maximize profitability and stay on top of their numbers.

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