Franz and Crystal Espanol bought their first rental property in 2014 and now own five other properties.
According to the two, renting a house does not mean “making quick money,” but rather a business that requires work.
To be successful, you need a good team, who researches and treats tenants well.
When 37-year-old Crystal Espanol heard from her husband Franz that he wanted to invest in real estate, she was hesitant at first.
She was concerned about paying off her six-figure syndicated student loans and felt they were not in a financially stable position to start buying real estate. However, Franz was convinced that it was the right time for her to start.
“I was really stubborn and wanted to convince Krystal that this was a way we could really take advantage of it and make our money work for us,” Franz told Business Insider. “So I bugged her until she gave up.”
The couple bought their first rental property in 2014. Today, Franz and Crystal own five properties in Philadelphia and one in Southern California – and they’re looking to expand their investments and operations.
However, it is not easy money. Crystal tells Business Insider that it’s important to understand the type of business involved in owning and managing rental properties. Here is her advice to anyone looking to create passive income from real estate:
Start with a good search
“I read a lot of books. I would go to the library every week and borrow books on real estate and finance,” Kristal said. “I was reading it in the evenings, in my lunch breaks, and listening to it as a podcast. It just gave me the self-confidence to invest in our first project.” And it was only after extensive research that I realized that investments are important as a way to build wealth – not just a risk.
However, not everyone is a good fit for a landlord’s job, and it’s important to understand the pros and cons of other options before making a purchase. “You don’t necessarily have to buy a property to invest in real estate,” Crystal says. “You can also simply invest with a real estate developer or buy REITs, that is, real estate stocks.”
Connect with other property owners and find a mentor
If you decide to become a property owner, Crystal says you should reach out to other property owners who have more experience than you. “Go to networking events, meet people in the industry,” says Crystal. “Listen to them and find out how they got to where they are now. Success leaves an imprint and you can read their stories to find out the secret of their success.”
Franz added that a mentor can also be helpful, as they can help you with resources and lead you to success. “Krystal and I have had mentors and we mentor others,” he says. “You’d be surprised how many people in your social circle are interested in your success.”
Invest in good property management
Crystal and Franz attribute much of their success to having a “star” property manager allowing the couple to run their Philadelphia business from a distance from California.
“At first, one of my colleagues was our property manager, but he sold his business to another gentleman – and it was so bad,” says Franz. Crystal then spoke to five new potential managers. Their gut feeling was that they should choose one of the more expensive options – which ended up being the right decision. Their new manager is worth every penny and neither has regretted the investment.
Realize It Worked (And You Have to Work)
Crystal is a lawyer and life coach and works full time but says her real estate is at least a “part-time job.” “You have to constantly ensure that they are in good shape, that the needs of your tenants are being met and that you are paying the bills.”
She believes that some people understand the term “passive income” to mean that there is no obligation to do the work after the investment – but this is not the case. “It takes a lot. It’s like a part-time job, but it’s something we love.”
Understand your obligations to your tenants
Being an alert and responsive landlord is important not only for ethical reasons, but also because the law requires it.
“Because we’re lawyers, we know real estate law,” Crystal says. “It is important to us that we provide our tenants a nice and clean home and that we make sure that repairs are taken care of quickly.”
Her own experience with a bad landlord in Philadelphia led her to focus on the welfare of the tenant. Her apartment was in a terrible state, according to Crystal. They were infested by mice and the owner did not bother with repairs. “We make sure all repairs to our tenants are dealt with promptly.”
The couple believes that you must really enjoy being a landlord in order to succeed in this business. “Some people think the owner is just a nickname – but people’s lives are in your hands.”