#610 Earn Passive Income Through Rental Real Estate Investing (feat. Dustin Heiner)

What if you could build real passive income from rental properties without becoming a landlord glued to your phone? In this episode, Mark J. Kohler interviews real estate investor and educator Dustin Heiner to break down how beginner investors can build a rental real estate business that generates consistent cash flow — without doing all the work themselves.

Dustin shares how getting laid off pushed him to rethink everything, how he scaled to 30+ single-family homes and nearly 1,000 apartment units, and why most new investors make a critical mistake by buying property first instead of building the business first. You’ll learn why cash flow beats appreciation, how to find and properly vet property managers, how to invest out of state, and how to structure your real estate investing so you work less — not more — as you grow.

If you’re a beginner real estate investor looking to escape the 9–5, build passive income, and create long-term financial freedom through rental properties, this episode will give you a practical roadmap to get started the right way!

You’ll learn:

• Why building the business before buying the property is the key to true passive income
• The biggest mistake beginner investors make when starting in rental real estate
• How to create consistent monthly cash flow instead of gambling on appreciation
• Why your property manager is the “quarterback” of your investing business
• How to properly interview and vet property managers before you buy
• The difference between owning rentals and owning a rental business
• How to structure partnerships the right way (and when to avoid them)
• Why cash flow investing helped Dustin thrive during the 2008 crash
• A practical roadmap beginners can follow to build long-term financial freedom through rental properties

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Transcript

People Over Properties

SPEAKER_00 0:00

If you listen to other TikTok gurus, they're gonna tell you the wrong way to do it. You buy the property and you try to find a property manager, you can't find a property manager, you no longer have an asset, you have a liability. Real estate's not about properties. Real estate's about people. I build a business first, find all the right people, and then I buy the inventory. A lot of people have heard of the book, The Four-Hour Work Week. Well, I think working four hours a week is for suckers. I only work four hours a month. It's not finding the deal, it's about finding your person.

SPEAKER_01 0:26

You gotta open your eyes, people. So without any further ado, here we are.

Guest Intro And Mission

SPEAKER_01 0:36

Dustin, thank you for being here and welcome to the show. I am excited to really dive into this topic of passive income, rental real estate, a passion of mine. Um my viewers know how I got into real estate, obviously, but I want to hear it from the horse's mouth. Tell us how you fell into this. Did you just come out of the womb and say, I want to buy rental real estate, mom? And you're, you know, I don't know. How did it happen?

SPEAKER_00 1:03

Definitely not.

From Layoff To Investor Mindset

SPEAKER_00 1:04

And I appreciate you having me on show. I I really just love investing in real estate because it, like you know, it's passive income, or at least it's not an active job where I'm going to work getting paid for an hour. I hated that. And so, but no, I didn't start. In fact, well, where I'm at now, 30 plus uh single family homes, most of them are all paid off because I like having them paid off, but that's a lot of cash flow. Almost a thousand apartment units um invest in hotels. But I didn't start there. In fact, I started just like most people. In fact, we were very poor growing up, grew up in a 900 square foot house, two-bedroom. My parents rented. Uh, but I'm I was taught just like everybody has been taught this exact same plan. You go to school, you get good grades, and you take those good grades, you go to college or university and get in tens of twenties of 30, $40,000 in debt or more, and then get a piece of paper called the degree, and then you go and try to find a job or a quote unquote career at some other company. So I started doing the exact same thing. In fact, I got the most stable, secure job you could ever think of. It was working for the local county government in California, doing IT or technology. Well, California's not going away. Government's definitely not going away and technology. Well, I did that, but then I bought one property in 2006. And that property, it started making me money, like $350 a month in cash flow, passiving up. This is after all the expenses. And I thought, my goodness, like I'm not working. My property's working for me. I need to be an investor. But you know what happens, Mark? Like, why did I start having yeah, yeah, I know what happened.

SPEAKER_01 2:31

You did this in 2006. Everybody, anybody that could walk and chew gum was buying rentals back then. Me, me as well. All right, so keep rolling. I'm liking it.

SPEAKER_00 2:41

Yeah, so 2006, we started having started having kids, one, two, three, and four kids. And I knew that I wanted to be an investor, but life got in the way. And this is really what shoved me, got me to become an investor because I was working a job. My wife had our key, our fourth child, and I went on paternity leave. That's where the dad stays home with the mom, changes poopy diapers and all the good stuff, bonds with a baby. And then I get back to work after two weeks. And on a Friday at 3 30 afternoon, I get a call from my boss's boss's boss's secretary, like the top dog. And she says, Dustin, would you please come to the office? And I said, Sure. And I hung up the phone. I thought, why are they calling me the office? Like this is not normal. And I've seen plenty of movies. Friday at 3:30 is not a good sign. So I hang up the phone and I start thinking about, oh my goodness, what's could I could potentially lose my job because there were some rumors before I went on paternity leave that there were budget issues in the county. I said, There's no way. I got great seniority. So I get up, I shake it off, and I start walking down the hallway. And this hallway isn't very long. In fact, it's kind of short, but every single step I took, it felt like it got longer and longer and longer. And the feet, my feet uh felt like lead bricks because I started thinking and realizing that I might lose my job. Well, I get down the hallway and I turn the corner, I see my boss's door. His door is closed, and I see his secretary there, super sweet, nice old lady. She says, Dustin, would you please have a seat? So I go and I might take my seat, and she's kind of sheepishly grinning at me, trying to console me with her eyes, because she knows everything about what's going on. I know nothing. Well, I go and I take my seat and I start thinking about my life. This entire plan that somebody else has taught me. If I lose my job right now, did I just waste my life doing this? And we just had our fourth kid. Did I does that make me a failure as a father? Does it make me a failure as a husband, as a man trying to provide for his ham family? Well, as I'm sitting there, my hands get all clammy, my forehead gets all sweaty because the nerves are just crushing me. Well, the door of my boss's office opens up and out walks a coworker of mine with a piece of paper in her hands. She's devastated. My boss says, Dustin, would you please come in? I get up and I go in and I get laid off. And remember, this is the government. Nobody gets fired or laid off from the government, but I did. And this is the reason why I tell the story. So I took that layoff notice and I go back to my desk and I realized two things sitting there in that desk. Number one, I need to get another job. I need to find a way to provide for my family. So I was really blessed, praise the Lord, to find another job in the same county. A different department wasn't having those this show check. The second thing was I need to make sure that this never, ever happens to me again. I need to make sure that nobody can take away my ability to feed my family. So right then and there, I said, no longer will I ever tell myself I work a job. Now I'm telling everybody, instead of when you get asked the question, what do you do? I would always reply with my job. I work for the county, doing IT. Now I started telling

The Case For Passive Cash Flow

SPEAKER_00 5:23

everybody I am an investor. Now it may so happen the 100% of my money came from my job. That's now my part-time job. I'm a full-time investor. So fast forward to the story. Started buying property after property after property, each one making me $500, $600, $7 a month in cash flow. Eventually I had 30 plus properties and I didn't need to work anymore. So last quick part of the story, I went to my boss, new boss and all, uh that the new job, I said, I'm laying you off. Here's your layoff notice. And we both laughed. And he says, What are you gonna do? And I said, I don't have to do anything. I own real estate that makes me money without working. Last quick part of the story was I would walk to and from my job from my car every day, a mile and a half, both ways. I've done a thousand times. Last time I felt like I was walking on clouds because I knew I would never ever need a job again. And for you listening, I want you to realize one thing. You're worth so much more than anybody could ever pay you. And you'll know this. Your boss is paying you just enough to keep you working without quitting, but not so much money it takes money out of their pocket. If they paid you what you were worth, they would go broke. So instead, what I suggest is building a business, investing in real estate, try to find passive income where you're having other, like you're not working an hour and get paid for that hour. You want passive income. So I'll pause the story because you've probably got plenty of questions.

SPEAKER_01 6:35

Yeah, no, I it's a very inspiring story. I know it's been lived by thousands, if not millions, of people over time. Um, that uh that pivoting that has to take place sometimes. Sometimes it's force, sometimes it's by choice, which is incredible. Um but I I don't know. I want to give give me your feedback on this. I want to kind of give a dose of reality to people also listening. Uh, I

Do You Really Work Less

SPEAKER_01 7:00

know you're sure they're successfully unemployed, and I don't have to work, and all that. I tell me what you think of this. I would argue, and this is the lawyer in me, so I'm gonna debate you a little bit, is that um the two biggest benefits come from this transition you went through was not that I work less. I'm gonna work harder. I I would argue that you put in more hours at work than you do did back then. But I will wholeheartedly agree that there's no glass ceiling on the income. The income can be, it's not gonna be limited to an hourly rate or a annual salary. I can make more money for the time I do put in. And number two, I am not gonna get laid off. And if I lose one rental or I lose one client, it's inconsequential. But I'm working harder. And I and I it bugs me when, and I'm not saying you did this, you didn't say it this way that people think, oh, I can do this, so I I can golf more or relax more. No, you're gonna work your ass off because the buck stops with you. Your thoughts.

SPEAKER_00 8:08

100% disagree. Absolutely disagree. 100% disagree. I will say disagree, 100%. I'll walk you through it. So

Build The Business Before Buying

SPEAKER_00 8:16

now I do I do have four other businesses that I run that those take my time, but the real estate is the least amount of time. In fact, a lot of people have heard of the book, The Four Hour Work Week. You know, the premise is to make your life so that you only work four hours a week. Well, I think working four hours a week is for suckers. I only work four hours a month. In fact, I may be 30 minutes a month on all my properties because I hire experts and I build the business. This is the thing. If you listen to other TikTok gurus or anything out there, they're gonna tell you the wrong way to do it. The right way to invest in real estate is not, this is what TikTok gurus will tell you. You buy the property anywhere and you find it, you spend thousands of dollars to buy the property, thousands of dollars to fix up the property, and then you try to find a tenant and you can't find a tenant. Then you try to find a property manager, and you can't find a property manager, and every property manager you call, all of them say, No, I will not manage it because I'll get shot there. Well, you no longer have an asset, you have a liability. What we do, what I've coached thousands of people now at Master Passive Income, coach thousands of people now to do this. And what we need to do is here's the key, and this is how I make it so I don't work. Okay, this is what I do for my real estate. I don't do any work. I build a business first, and then I buy the inventory. And you know what inventory is. Inventory is basically just like a candy bar in a store or whatever, it's something in your business. Now, what most people do is they'll buy a property hoping that they can find a tenant, hoping that we don't do that. If I'm building a business, I'm going to know for a fact that I, when I buy this property, it's going to make me $500, $600 a month cash flow because I found the right people before I bought the properties and those right people property managers, contractors, insurance agents, uh inspectors, plumbers, roofers, like you name it. And if you noticed, I didn't even mention realtors yet. Realtors are the last things. You need to find them last. The first thing is how do I make sure that I never work in this business? And how you do that is by finding the right people, and then they do all of the work. I've been investing since 2006. In fact, in 2006, if you remember, 2008, the crash happened, and every single real estate investor went broke, just about everybody. I thought I was gonna go broke. I didn't. I made more money. Do you want to know why? I was not hoping for appreciation. I invested for cash flow that made me money every single month. And here's the great thing. I made more money in 2009 and 10, even though

Property Manager As Quarterback

SPEAKER_00 10:45

everybody else is going bankrupt, because sadly, when there's an economic problem, sadly, people are gonna lose their homes in foreclosure. But that turns them into tenants, and they're now supply and demand, rents go up. But the biggest thing is we build the business first, we have the experts do all the work for us. Does that all make sense?

SPEAKER_01 11:04

Um yes, yes. Um, who are some of these experts that that you say do all the work for you? Like give me some maybe some of the things.

SPEAKER_00 11:13

Absolutely. So here's a funny thing. Just like you, Mark, I've been doing this online stuff for oh well, not nearly as long. You've been definitely doing so much longer than me, but 2016, I started my podcast, uh Master Passive Income Podcast, over 2,000 or sorry, 2 million downloads now, and just me, a solo show teaching how to do this. Here's the crazy thing. And you probably get because you know what people need, but they download or listen to what they want. Let me explain what that means. So on my podcast, you know, we have shows of all the run run the gamut of what you need to do as a real state ambassador, it's just me coaching. The most downloaded and most viewed, download on podcast or listen to the most YouTube videos for master passive income is how to find and how to finance, how to find properties and how to pay for. Because that's what everybody thinks initially. I don't have money, I don't have the properties. How do I get those? They go after those. When I know what they need is not that. Those are the easiest things in the real estate investing business. I've been doing this for 20 years now. I guess 20 years, yeah, coaching people for 10 years now, that now I know the number one thing that they need is building their business first. And here's the right person. Your quarterback of your football team is your main person. That's the that you need the best quarterback you can get. Your property manager. Your property manager is your quarterback for your real estate investing. And not just when you're buying, well, yes, when you're buying the property, they're let me say it this way. I get a lot of people say, Dustin, I spent thousands of dollars to buy the property, and then I try to find a property manager. All of them tell me no, they can't, they won't manage it because they'll get shot. Like, you don't have an asset, you have a liability. Instead, before you buy the property, you call up a property manager and you find the right one that fit in your business and you say, Hey, property manager, I'm looking at buying this property, you know, number one Happy Street. Will you manage it? How much will it rent for? What's the vacancy factor? How much will repairs be? And if they say no, you don't waste your time and effort and money buying that property. If they say yes, in fact, we have a property right around the corner.

Choose People Before Asset Class

SPEAKER_00 13:12

Zillow was trying to said we could get $1,600 for it. We could not, we could only get $1450. That's expert information. So the most the least downloaded and least viewed are the property management, how to build the business and manage it longevity-wise. Is this making sense?

SPEAKER_01 13:28

Oh, of course. I love it. I was interested to hear who you uh chose as your leading expert. And I I'm glad too that you didn't say accountant or lawyer or realtor or banker or frankly, even real estate coach. You're not the most important. I'm not the most important. And I agree with that. Um, it was funny. I was um on a recent vacation with my wife, and there was a I and I'll leave it at, I'll just call it an asset that we were thinking of acquiring and putting into um a rental scenario. And I'll just you may have an example like this too. And we met the perfect manager for it. And we know that that asset could be acquired in six different locales across the country. Um call it a rental property, call it a boat, call it an RV, call it a whatever. Um, an asset that you can create passive rental income from. And we hit it off with them. And in life, I really feel like there's these divine moments where that property manager or business manager, project manager, they're looking for you. They're looking for that perfect client that's not going to be a pain in the butt, where they can make more money than usual, have a piece of the action, maybe, and you're looking for that perfect manager. And so we had this connection, and uh, thanks for letting me explain this because I want to get your take on this. Is that my um my wife was like, as we were leaving, she was like, Patty was like, Well, let's look at this asset. It could be better in this area, it could be better in this area. And she goes, Why aren't we looking over in Miami for this asset? And I go, because there's no him. Uh we just found the key. The key was him, not the asset. And and our ranch in Utah, we found the rancher built the ranch, and that because we couldn't do the ranch without our own rip. And we have a combination of Rip and Lloyd from Yellowstone. He's incredible. Greg, I love him, and he's the key to our success, and I compensate him very, very well, and which has been a blessing for him. So it's a win-win. So I believe that divine connection with your manager is absolutely critical. Your thoughts.

SPEAKER_00 15:51

You are absolutely right. 100 I've and I don't fly anywhere. When I was younger and I didn't know what I was doing, I flew to um Ohio, found a first property in 2006, bought it. I still own it. In fact, it's double the amount of rent now, which is great. But then I was like, I need to find a new area.

Hiring And Testing Managers

SPEAKER_00 16:08

So I flew to Illinois, if uh, I think Springfield, I saw a good property, good assets that I could buy at a lower price, rent it for higher, but I did not invest there. Even though I flew there, spent you know, days there finding, I could not find a property manager. So I didn't buy any properties because I don't want to manage them. That's the thing. People, mom and pops, they get into investing. They buy a property and they get relegated to running the business themselves. They could only get to maybe six, seven, 10 properties at the very most before their time is just taken up. And so what I suggest, and you're 100% right, assets are everywhere, but obviously assets make you money. But if it, if you don't have somebody else that manage it for you and then taking care of it for 10, 20, 30 years, I have managers that have been with me for 20 years, ever since I first got started. I I invest in five different states now: Ohio, Texas, Arizona, Tennessee, and Indiana. And in all these areas, before I buy the property, because the asset is anywhere, like you're saying, it's the people in place that they are the ones that make sure that you're gonna be making money for 10, 20, 30 years later. So you're 100% right.

SPEAKER_01 17:14

No, I I this is uh I did not expect this turn uh or in in the conversation to this point. And I'd love to unpack this even more because I think people get also um laser focused on a certain asset class. Like they have got to buy duplexes or they've got to buy uh storage units or mobile homes and all that. And I'm like, let the universe tell you um what you should be buying in. Look for the person that's gonna help you succeed because you're gonna be an absentee owner. Um and and I'm and I'm I'm a spiritual guy, and I don't talk like this a lot on in my podcast

Incentives Vs Equity For Managers

SPEAKER_01 18:01

per se, but I do want to say it here more and more in life. I believe I've always believed there's a higher being a force in this universe that that is trying to communicate with us and help us. And yeah, we're gonna have ups and downs and problems and all that. It's a it's a the life is 50-50. But on this note, it was interesting. Uh, my rancher, back to this, we were deciding where to move this stream through the through the property. And were we gonna build a pond? And I wanted to put some trout over here, and I wanted to build this pond, and I wanted to move the road around. And I in my mind thought, this is where I want the road, this is where I want the stream, and this is where I want the pond. And Greg was like, Mark, just sit back. What's the land tell you? Let the land tell you where this should be. And and I think so many real estate investors try to force the round peg in a square hole or square peg in a round hole, and they they don't just sit back and go, bring it to me. I'm ready. And they can't be ready if they don't build the business first.

SPEAKER_00 19:09

You're 100% right, man. I'm I'm so glad you said this because when I look back at all the coaching I've done, or even just my own investing, it is not well, there's two different things. Number one, looking for the right deal is not the right thing you should. You should, when a deal comes, let me say this one. I get a lot of people, students, that say, Dustin, should I look for a single family home? Or that's the big word they love to use, or a duplex, or should I look for a mobile home, or should it's always an or. And I say, no, no, no, get that word or out of your mind. Because whatever deal comes your way, if you're thinking, I'm only going to invest in duplex, and an amazing single family home comes in your in your purview, you're like, eh, that's not my duplex. No, no, no. Whatever comes your way, whatever deal is in front of you, that's what you go after, and that's what you take down. If it's a great deal, why would you pass it over? So that's one key point, but you also said something a little bit earlier that I have to touch on asset classes and getting the right people. I'm gonna say this.

Partnerships, Loans, And Scaling

SPEAKER_00 20:09

This is a blanket statement for my life, and hopefully everybody else will take this too. Real estate's not about properties. I'll say that one more time. Real estate is not about properties, business is not about products, and life is not just about experiences. Real estate's about people. Business is about people, life is about people. If you make your life, your business, your real estate, everything about people, things will get so much better. So here's the thing: my bread and butter, what I've done over 30 plus times, um, coach thousands of people now is single family homes. When I say single family, four units and below because of the loan structure and all that good stuff, but four units and below. That's so easy. I've done it a thousand times. But I also love Play Monopoly, which means I want to get into bigger and different asset classes. But then I started thinking, do I really want to learn how to do it? Do I want to be the expert? It's like, no, I don't, but I know people who are experts. Give you an example. I now own almost a thousand apartments. We have uh three major big facilities, almost a thousand units. And I am not the expert in multifamily apartments. But I met some friends of mine about four or five years ago. They came and spoke at

Free Course And Where To Find Dustin

SPEAKER_00 21:18

one of my large conferences that I put on, bringing hundreds of investors together. And they spoke at my conference. I met them the first year. And after four or five years, hey, Dustin, we think you'd be great at being a part of this multifamily. We're buying a 350-unit apartment complex near Nashville. We want you to be a part of it. I'm like, oh, yeah, let's let's do it. So bring it all back to whatever deal comes your way, just the universe or however it works out, you look at each individual deal. You do not write it off just because it's not what's your perfect buy box. But then the same time, it's people. When you get the right people around you, things get so much better. And you're not spinning your wheels or wasting your life because you're trying to do it yourself. Getting other people around you is the best way to go.

SPEAKER_01 22:00

Yeah, I've got to come up with something cool. You know, everybody focuses on the buy box. They need to focus on the people box. Um people hit box. Yeah. And uh and hit it. Um well I yeah, no, that's just it's just uh fascinating. I agree with you because once you have the right person with the boots on the ground, uh everything else really starts to fall into place in my mind. Because no one's more important than that person. You you know, a realtor could be

Final Takeaway: Find Your Person

SPEAKER_01 22:33

dispensable, a handyman could be dispensable, the lawyer accountant could be dispensable. And so you start to build your team around that, but you take care of your property manager and um or project manager, whatever you want.

SPEAKER_00 22:44

And I'll say that I'll say it this way. And you said this about the your your rancher. I don't mind paying my accountants plenty of money or my property managers plenty of money, or like lawyers, like they're experts. I don't want to be the expert. I can make more money. Why don't I pay the experts and stop trying to because I've tried it a long time ago. I was trying to do my taxes, but I am terrible. What takes me literally years to do, it'll take an accountant five minutes. And so I'm like, why am I I'm not saving money? In fact, I'm wasting time. I should just pay this accountant to do it. Same thing with managing the property. I'm not good at managing properties. In fact, I'd much rather be doing other things, going to the gym, coming on podcasts, and talk to great people like you. I'd much rather do that than talking to tenants, fixing anything, or doing anything like that. So I hire the experts who enjoy doing this. They enjoy like they my property managers, and oh, here's one big key. Because um, you your people, like if you're listening to this and you're like, well, Dustin, how do I find the right property manager? Because you're telling me this is the right thing to do. Well, here is exactly how you do it. Let me give you a quick example of what you we do. So we build a business and imagine, I'm gonna give you an analogy. Let's say you're gonna start a convenience store, you know, candy bars and soda machines and all that good stuff, a business that's a convenience store. Well, you would not sign a lease on a location, open the doors, and set a box of candy bars in there on the ground. You wouldn't do that. You go out of business in two seconds. What you would do, build the business first. Get the gondolas, those are shelving units, all the candy bars go on, the countertops, cold storage, bank accounts, cash registers, insurance, employees, everything before you buy any inventory. Same thing with real estate investing. We build the entire business, find all the right people, and our properties is that's inventory. I'm not gonna live there. That's inventory. Now, here's the key getting back to the property manager. Just imagine you built that entire convenience store, you got your inventory in there now. You see somebody walking across the street and say, Hey, you got a pulse. You come in here and manage my money, manage my property, like my inventory, manage my customers, manage, manage everything. You would not do that. You would take your time and hire slow and fire fast, meaning if they're not good, you get rid of them, find somebody else. But you hire a property manager or a manager of your members, it's just a business. But we interview, I personally coach all my students, interview at least six to 10 different property managers in that city. And then I give them 24 different questions that the questions and answers that they should ask and the answers they should hopefully get. But then they rank them in order, just like if you're hiring for a manager of comediosaurus. Okay, this is my top pick, second, third, and fourth. And then we do three interviews. This is like literally on the one-on-one coaching what I do. Um, we interview 10 different property managers, but with then we talk to each one three different times. Because anybody can have a great first phone call, a great first depression, but then the second time they don't call you back. And we're like, well, shoot, you don't even have my money yet. If you don't call me back when you don't have my money, how much worse would it be if they have your money and they want to call you back? Go ahead. I know you got point. You want to make that?

SPEAKER_01 25:44

Yeah, uh, what are your thoughts? Totally. Uh and I mean you I know we could do a uh you'd probably have two, three-hour sessions on how to find and uh get a property manager. I've taught a class and on how to manage your property manager. Like once you get them, there's an art to managing them too. But let me ask this yes what are your thoughts on partnering someone in a locale and making them the they're the manager in an equity relationship. So it's a off the PL. You're not paying them 10% of this, or what off the PL is an equity position where they serve as the property manager without credit or investment.

SPEAKER_00 26:24

Thought that is an I would say another way to skin a cat. Basically, there's more ways to do it. So one way is paying them 10%. Actually, people ask me, well, Dustin, what's the normal price for a property manager? Yeah, every different, actually, every state and every city is different. Sometimes like higher rents, 10% is too much, so they have a flat fee of like $95 per property. You know, it just depends. So what I look at for a property manager is should I, and well, getting to the idea of a property manager having equity, I personally don't like that. It's a possible way, which they get skin in the game and they're gonna want to be a part of it. I personally, I just I don't like partnering with people in general just because eventually it seems like I do 100% of the work and I get part of the part of the benefits. It's not a bad idea, though. In fact, I know some really good investors that partner really well with great people and it works out well for them. I just know for me, partnerships haven't worked well, but that's a great idea. If that's if you need to find somebody, that's a great way to do it because they have skin in the game to keep that property rented and making money.

SPEAKER_01 27:28

Well, you said something. I very interesting at the very end there, if they have skin in the game. I like seeing a property manager with equity if it's structured properly. But it can be a disaster too, because if you bring this person in in equity to manage it and they do a crappy job, you can't get rid of them. You cannot get rid of an equity partner. Um and so the accountability is very, very challenging. For those listening, the way if you're in, if you want to go that route, I like to have them share in the profit from a non-ownership standpoint. So you can sign a contract, think of it like a stock option that if this goes well and we have profit at the end of the year, you can have a fee for that on top of your 8% or of gross. So you can have 10% of net, 20% of net, 10% of gross play. So you can put some incentives in there, but treat it more like a bonus plan and it's on top of their 1099. And if you say if we go to exit and we sell the property within five years and you're still here, so it creates a besting situation where it's like golden handcuffs, where if they stay for the ride and they do a good job, uh, they can have a piece of the sale as well. But at any point, it's at will. So if they screw it up, let me give you gone.

SPEAKER_00 28:57

Let me get what the reason why I like that idea too is because some property managers they nickel and dime you on repairs. It's like, it's like, what do you mean, $200 to fix a leaky toilet? No, it doesn't cost that. I know how much it doesn't cost. It doesn't cost that. You should go handyman over there, do eight things at once. Yeah, that helps them to keep the expenses down rather than nickel and diming. It's a good idea.

SPEAKER_01 29:18

Yeah, you want them focused on the bottom line. And so what I'd like to do, if I may, is and I wanted to get your take on this, is that property managers, rather than pay a property manager 10%, so let's say, let's say uh gross rent is 100 grand. 10%, they would get paid $10,000. Um, but let's say net profit is $20,000. So a 20% margin would be cash flow margin would be nice. A 20% cash on yours are gonna be a cash, all sorts of ratios. We got cap rates, cash on cash, ROI, blah, blah, blah. Let's just say the net's 20. Gross is 100. Well, if I give them 5% of gross, which would be five grand, and then I'll say, well, I'll give you 20% of net, now they're getting uh four grand at the back plus the five, and if they can make it any better than 20, they are they're winning. They're making more than they normally would. But so now they're worried about the net more than they're worried about top line. So whenever we can get them worried about bottom line rather than top line, but they gotta make sure they get something. So you you just trim it down and then you put that big carrot out there. And I think if you can manage it properly, uh anything, any improvements they make, they win. And uh I like to get that idea.

SPEAKER_00 30:40

No, no, and and I I like making because you remember I said real estate's about people, business about people, life's about people. If you can create a win-win on every scenario where every person wins, then every like life gets better. You can sleep well at night, and people look at you as like, man, this person's really helping me out. And they look after your welfare and vice versa. So 100% with you. And at the same time, thinking about if I were to partner, because I know a lot of people and probably listen to your show, like having income and having money, they need to park it somewhere, which real estate's fantastic to park it or you know, to actually make income and generational wealth, you can give it to your kids and all the great stuff with it. Um, but at the same time, some people don't like the fine financing is a problem for some people where they're like, man, I just don't, I haven't saved up enough money, or I don't have uh credit or something like that. But if there was ever a time for a partnership or bringing somebody on, let's say you had very little money, but you had so much ambition, I know lots of my students, they either find somebody or know somebody or even a family member that has the cash. And so what they would do is they would go in and just to get help get them started, equity position, the person has cash, they're not going to do anything in the business, meaning they're getting 50% or whatever you would work out, 40%, whatever you want to work out. And you, just for getting the deal and doing all the work, get the other, you know, let's say 40%, 50%, 60%, whatever work out. That's the type of partnership I like, but not in equity in a loan. That's what I remember. I I'm not a big partnership person. A lot of people can be, but just for me, I'd much rather have them have give me a loan in a quote unquote partnership kind of way, but they're loaning, and then I pay them back, and then I have the property free and clear. But in general, I love that idea with having a property manager be your partner. It's if if if we can make everybody win-win and win, life's gonna get better for everybody.

SPEAKER_01 32:31

Yeah. And I would say a pseudo-partner, because we got to be careful of partnership terminology.

SPEAKER_00 32:38

Um I don't think like a like you, you you had a bigger brain than mine. I'm just like, let's be in simple terms, but you're right. That's the way to think about it.

SPEAKER_01 32:45

Yeah, that management contract has got to be freaking dialed in. And our lawyers at our firm can help people do that. I like that. Well, tell me um how people can get started with you and learn more about what you're doing out there.

SPEAKER_00 32:58

Oh, thanks, Mark. Yeah, so my goal is to help one million people to invest in real estate. And would you mind if I give everybody a free course completely for free? Sure, as long as I can take it too. Absolutely. So if you, and I know you're probably listening on the phone. So if you text the word rental, R-E-N-T-A-L to 33777. Rental to 33777, or go to masterpassivincome.com forward slash free course. I'll give you my free course, show you how to find a anywhere in the country how to build the business. And we love investing out of state, how to scale the business so that you can hopefully get uh financial independence, and then you can hopefully be able to, if you want to quit your job, but you have freedom to do whatever you want. So that's number one, masterpassive income.com forward slash free course. But then I have my podcast. And Mark, you were just on my show, which is fantastic. So I appreciate you come on and dropping so much wisdom on there. It's master passive income. In fact, Mark, this is great. If you look up real estate investing in Apple Podcasts, I'm number one, been there for like three years, number one at real estate investing, which is I'm I'm really happy about that. Yeah, yeah.

SPEAKER_01 34:06

Oh, that's awesome.

SPEAKER_00 34:07

No, I'm so grateful to be at master passive income anywhere. But another thing, I've been actually getting really into Instagram and social media. I've grown my following to over 206, 60,000 followers now organically. Didn't buy any of them. So if you want to follow me, if you want to reach out, just send me a DM. I'm an extrovert, so reach out to me. I love talking to people. Say, hey, I found you on Mark's show. Um, but it's the Dustin Heiner, T-H-E Dustin Heiner. And my goal is just to help you to invest. That's it. And get everything for free. I'm here to help you. But thank you so much for having me on the show, Mark.

SPEAKER_01 34:41

Oh no, and thank you uh uh for being here. I know how busy you are, and um so grateful for the wisdom you shared. I really, really liked uh that. And it's funny to just literally last week Patty and I had that conversation about it's not finding the deal, it's about finding your person. And uh and the universe will bring them to you if you ask. You just gotta open your eyes, people. It's crazy. Um, Dustin, thank you. I'm sure we'll have you back. God bless, and uh we'll see you on the backside.