
On today’s show, I talk to Dan Lane, host of the Rental Income Podcast where he has interviewed to over 100 successful real estate investors. He has compiled 10 of his most important lessons learned from all of these interviews, and we go through each of them today.
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10 Lessons Learned From 100 Successful Real Estate Investors – Dan Lane
Welcome to Passive Real Estate Investing. I’m your host, Marco Santarelli. It is said that mistakes are made but lessons are learned. One of my friends, Dan Lane, is a guy who has interviewed over 100 successful real estate investors. He always asks the questions that he should’ve asked when he got started investing in real estate. He’s learned a lot of good things and has walked away with a lot of great takeaways. I asked him to come on the show today to share with us some of those, the top 10 lessons that he’s learned. It’s great to have him on the show to share that wisdom that has been accumulated by many people over many years and that can help you shortcut your path to success and avoid stepping on the same landmines that other people have had or to maybe just curtail and accelerate the speed at which you accomplish your goals.
It’s my pleasure to welcome Dan Lane to the show. Dan is an accidental landlord. He’s also the host of the Rental Income Podcast, happens to be one of the podcasts I listen to on a regular basis. Dan wants to share his experiences and knowledge with you, our listening audience today. I’m excited about that because he has learned a lot from virtually 100 successful real estate investors that he’s interviewed here over the last, I’m not sure how many years. With that, Dan, welcome to the show.
Hey Marco, it’s an honor to be here. Thank you so much for having me. I love your show too. It’s a real thrill to be on with you.
I’m happy to have you on. You sent me a list of lessons learn and I thought, “Wow, these are pretty good.” They apply to different people in different ways, but there’s something here for virtually everybody. I want to jump into those here in a couple of minutes. Let’s start off with you, because it’s always good to know who you are and where you came from. In your case, how you got involved in real estate accidentally. It’s a great story. Please share that with us.
When I graduated from college, I got a job in Corporate America. After a couple of years, I was making some money and I decided I was going to buy a property. I bought a house and I wasn’t planning on having roommates. When word got out among my group of friends that I bought a place, I started having a lot of friends reach out to me to ask if they could rent a room and move in with me. I said, “Sure. Let’s do it. This will be fun.”
When I started doing the math, I was realizing that I was going to be living there for free, that their rent was covering the mortgage. I was just in disbelief. Today, we have a term for that. We call it house hacking. At the time, I wasn’t familiar with that concept. I just figured I had stumbled upon something that was really cool. Just as luck would have it, the market was also appreciating around that time. About two years later, I sold the house and I made about $100,000. It really worked out awesome that I lived there free and had this big pile of money. I was hooked. From that point, I wanted to do it again.
I ended up getting my real estate license to learn more about real estate. When I became a realtor, initially I wanted to learn more about investing, but it turns out I really didn’t learn anything about investing. I was working with people that were buying houses to live in. What they’re looking for in a house is totally different from what an investor would be looking for. That’s basically how I got started.

More recently, I guess about three years ago, my wife and I decided we were going to buy a new house. I decided to rent out the old house. I looked at the numbers and saw I could rent it out for more than the mortgage payment. When I started renting the house out, I had a lot of questions. I wasn’t sure who to ask, I wasn’t sure where to go. I love listening to podcasts and I was looking for a podcast where they interviewed successful landlords. I wanted to figure out what people were doing. I couldn’t find a show like what I was looking for. I started the Rental Income Podcast as a way to ask the questions that I wanted to ask.
You did a good job at it too. I think it’s a valuable resource for a lot of people. You’ve mentioned getting your license and becoming a real estate agent. I think a lot of investors think that they need to do that, but what they don’t realize is that, real estate agents, first and foremost are sales people. What they learn from going through a class or studying the materials before they write their real estate exam is what they’re actually studying is 90% not applicable to what they’re going to be doing out in the field. It’s all just rules, regulations, real estate law and the like.
Absolutely. I couldn’t agree with you more. Getting a real estate license is not going to help anyone be a better investor.
I think the only place and time that it actually helps Dan, is if you’re actually investing in your local market and having access to the MLS is important to you and you don’t want to rely or wait for your real estate agent. You could become your own agent and use it just specifically for accessing the MLS. I think that’s where the value is.
Absolutely. Having access to the MLS is really important. There’s ways to get access to the MLS without actually being a real estate agent. One thing you could do is you could ask a real estate agent if you could be their assistant, not actually do any work but if you can talk them into doing that a lot of times you can get access to the MLS that way. There’s ways to do it without going through that.
You sent me a list of ten things learned from doing your podcast and in talking to other successful real estate investors. What I did is I just took each bullet point that you sent me and I broke it down or summarized it into one, two, three, four words. What we’ll do is this, I will just tell you what the paragraph was about. You can explain it and expand upon it and then I’ll comment if I have any comments about it.
Sounds good.
I love the first one. I basically boil it down to simply this, an abundance mindset.

This is I think so important. When I was going to start the podcast, when I first had the idea of starting the podcast, I was talking to a friend of mine. I was telling him about this idea that I had where I wanted to interview successful landlords. My friend said, “Why would they want to share what they’re doing? Why would they want to tell the world that they’ve figured something out?” It really gave me some doubt, maybe this isn’t going to work. I did it anyway.
When I started talking to investors, I realized that they don’t think that way, that investors are willing to share whatever they have and they don’t look at other investors as competitors. We’re all working together. I found that the successful landlords really don’t have a scarcity mindset that they have an abundance mindset. They really make things happen. My friend didn’t really have that attitude or that philosophy. The interviews that I’ve done have showed me that investors really do have that abundance mindset.
I agree. There’s no lack of opportunity out there. The US is huge. We have over 400 metropolitan statistical areas. We have hundreds of thousands of houses out there that make incredible rental properties. There’s just opportunities everywhere you look. You just have to know what to look for. If you don’t know what you’re looking or if you don’t know how to proceed, work with someone who can help you. Home ownership rates have been dropping, which means the rental pool has been increasing so demand for rental property is increasing, interest rates are low. We have a perfect storm. You only limit yourself by having a scarcity mindset.
If you change your focus and you shift your mind to an abundance mentality, you see opportunity everywhere not just with real estate, but virtually with anything that would be a business or an investment or an entrepreneurial endeavor. I think that abundance mindset is important. You can help yourself by expanding your mindset, by listening to positive material, through podcasts, reading books, going to workshops and seminars, networking with other people, hanging around with people that are like minded and positive will help you too. You’ve heard the saying that you become much like or the average of the five people you hang around the most.
That’s so true. I get so much inspiration not just on the show. Definitely on the podcast, I’m talking to really successful people. That motivates me. I also go to meetings and network with other investors. I always get fired up and walk away with ideas whenever I meet with other investors.
I agree. The next item, I just call this fear of starting, but I think there’s more to it than that.

You’ve got to be careful who you take advice from. I don’t know if you ran into the same thing when you were thinking about buying rental properties. Before I got started, people would say, “You don’t want to buy rental properties because tenants are nightmares and you’re always going to get calls at 3AM telling you that a toilet is broken.” That was something that really freaked me out a little bit.
That hasn’t been my experience. Owning rental properties, I’ve never gotten a call at 3AM. Actually, I asked this question on probably the first 40 episodes, every single guest, I asked them if they’ve ever gotten a call at 3AM that a toilet was clogged. I think we had one or two people that had gotten that call over hundreds of properties collectively all those landlords owned. It’s not a rational fear. Be careful who you take advice from. If you want to know if owning rental properties is a good investment, talk to people that are doing it. Don’t talk to people that aren’t doing it.
I’ve heard the same thing. It’s very rare that you hear these stories that you get a call at three in the morning. I’ve self-managed some of my own properties over the years and I’ve never had a call like that. If I ever get a call, it would be during the day, “Here’s what happened or I’ve got an issue. It’s not an emergency, can you get to it today? Can you get to it tomorrow?” For most investors, at least the people we work with Dan, they don’t even know who the tenants are. They’re not the landlords. They own the property, but they have professional management in place so the manager is getting the call, not the investor that owns the property.
It’s an irrational fear that people have that they think that owning a rental property is going to add a lot of stress to their life. The reality is, just from the hundred people I’ve talked to, is that it’s not really as bad as people fear.
That is such a small tiny thing that if anybody lets that fear prevent them from getting started, they’re missing the big picture. They’re losing out on so much opportunity because of a fear that really is just a sliver in time for them. Risk of buying more, that was your third one.

This is the interesting concept, is that most people would think, if you talk to someone that’s not a real estate investor, they would tell you that owning ten houses is a lot risky than owning one house. There’s somehow less risk in having less. From the most successful landlords I’ve talked to, they look at it as the reverse. If they have one property and that property has a problem tenant or that problem goes vacant or that property has some major repair bill, that’s going to ruin your day because that property is the only thing you have going on. Where if you have ten properties and one of them has a problem, it’s not going to affect you as bad because you have nine others that are performing. The most successful landlords look at more properties as actually being less risk. I think that’s an interesting concept. I think they’re right. It’s hard for some people maybe to wrap their head around that. I think it’s true that the more properties you have, the less risky it is.
Sure, because the cost of whatever that expense is that you’re incurring is diluted across multiple units, whether it’d be 5, 10, 20, 30 units that you have. Even a vacancy, which you just mentioned is one unit out of a total of 10, 20. Your vacancy rate is only 10% or 5% versus 100% if you only owned that one rental property. There’s actually less risk.
You just need to scale up. I think it’s interesting to hear how other people have scaled up. Some people dive in and they want to buy 10, 20 properties in a year and they want to build up their portfolio quickly. Other people might take it slower and buy one or two properties a year. I think I’m in the latter group where I’m building my portfolio slowly, adding up a property or two a year. That works for me. I think everyone just needs to look at their personality and see what works for them. I think ultimately, your long term goal, if this is something you want to do, it should be to buy as many properties as you can.
I agree. That really comes down to what are your personal investment goals and what speed you want to go to get to whatever your financial goals may be. I’m going to also add one more quick comment here, Dan. Risk, I sometimes say it quotes because when people think about having one property as being risky, they’re thinking, “What if I have a vacancy or what if I have a repair come up?” The thing is, vacancies and repairs are going to happen. It’s inevitable. We’re dealing with people and they will move or lose their job or whatever the case is. Things will break, there’s something called wear and tear and it applies to cars, it applies to houses.
When you budget in the vacancies and when you budget in those maintenance and repairs and capital expenditures, then nothing that comes up will be a surprise. You’ve expected it, you anticipated it, you’ve budgeted for it. You just deal with it and you move on. Now, the best thing to do is just multiply that times 10 or 20 and have that across a larger portfolio of properties. Now, guess what? You have more cash flow, you have more wealth creation through equity growth and so on.
What’s interesting, is that a lot of the bigger landlords that own 50, 100 properties, they’re not even budgeting for that stuff because they have so much cash flow coming in that if there’s a repair or there’s a vacancy, it’s not that big of a deal to them. I think budgeting is important, especially when you don’t have many rentals. It’s not something that the bigger landlords are even really thinking about.
For sure. Next item is know your numbers.

This is something that I think gets a lot of people in trouble. Going back to budgeting for vacancy and repairs, I think a lot of new investors underestimate how much it’s going to cost maybe when you have a turnover that when you have a tenant move out, maybe you’re going to have to paint or carpet. It might cost you $1000 when a tenant turns over. You’ve got to make sure that you budget for that. I think a lot of people might look at a deal and say, “My mortgage is 500 bucks, I’m going to rent this property out for $1000. I’ve got $500 a month cash flow.” That’s just not true. You’ve got to budget for repairs, CapEx, vacancy. The bigger investors, they know their numbers. They know cold how much things are going to cost and how much cash flow they’re going to have.
I think it’s important to do your analysis and your due diligence properly right from the beginning so you don’t get into something without knowing what to expect. You can’t control for everything but you have a good idea of what your monthly and annual cash flow and your numbers look like. I like to have $200 to $300 per month as my target per door on any property I purchase that’s fully leveraged. Meaning that I’ve put the minimum down, maximum financing. Some properties will produce more than that but I like to stay in the neighborhood of $200 to $300 a month in cash flow after factoring in vacancy and repairs. I don’t know what you’ve heard, but that’s what I work with.
I think that’s right in line with what most of the people I’ve talked to, that’s what they’re looking at.
Good. Picking a niche, what do you mean by pick a niche?

Don’t randomly buy houses. Don’t say, “I’m going to buy a C class property today because I like the cash flow.” Then maybe next month, you find a college rental that you think is a good property because of the location. Then maybe next month, you want to buy a place that you’re going to turn into an Airbnb because it’s in a great location and you think you’re going to make a lot of money. Most of the successful people I’ve talked to, they’ve found a niche and they’ve just exploited it and they just keep buying the same properties over and over and over again once they figure out something that works. Whether that niche is a turnkey and Marco’s helping you get involved in different cities, I think that’s a great way to go. Or if you’re going to do college rentals, do college rentals.
I think for me personally, if I try to do a college rental, I’m probably going to fail at it because there’s a whole different way to manage that kind of a tenant than you would find in a B class property or in A class property or with low income. A lot of investors would say, “Don’t buy a D class property.” I don’t think that’s true. If you know what you’re doing, if you know how to manage those kind of tenants, you can make a lot of money in those neighborhoods. I think where people get in trouble is they don’t know what they’re doing and they’re just looking at the numbers and they think, “Oh, I’m going to make all this money in this really bad neighborhood.” Most people that go into those neighborhoods without knowing what they’re doing, they end up losing their shirt. Just specialize is my big takeaway.
What would you say to someone who has a fairly substantial portfolio of properties and they’re all common? Meaning, that they’re all A class neighborhoods or B class neighborhoods. They’ve established their portfolio in that niche. Now, they’re looking at, let’s say, higher cash on cash properties in C grade neighborhoods. They’re looking at a higher rate of return but it’s different than what they’ve been buying. Do you see that as being a failure or a problem?
I think as long as you have someone helping you out or you have someone that’s going to be able to manage in that C class neighborhood, I think you’ll probably be okay. It’s just a matter of getting the right team together. If someone can help you, you can really accomplish anything. I think when you just go into it and you don’t know what you’re doing, I think that’s when you get into trouble. You think I’m just going to wing it and figure it out, that strategy just never seems to work.
Having a right team is very, very important, especially with property management, I jokingly say, “You live and die by your property manager.” That’s good. Picking the right niche, focusing on what you know best and what you’re comfortable with and having the right team is really the takeaway there. Why you’re buying rentals.

I think this is interesting. We had one guy on the show who he had a factory job that he hated. He wanted to get out of this job. His goal was to replace his income as quick as possible. He started buying a bunch of rental properties and he ended up with 50 properties. They’re all making a few hundred dollars a month. He has a lot of leverage on these properties. He’s making enough cash flow that he’s now able to leave his job. That’s why he was buying the properties, for the immediate cash flow today.
I had another guy on the show that he was looking more long term. He wanted to get his properties paid off. He put fifteen year loans on all of his properties. He worked on getting them paid off. Fifteen years later, he had fourteen properties that were all paid for. Today, they’re both on the same place. They’re both doing very well. They have a lot of cash flow. But they got there in very different ways. I guess you got to figure out, are you someone that’s comfortable with debt? Because the first guy has a ton of debt but he’s doing really well with it. The other guy has no debt at all and he’s also doing really well. They don’t feel any stress, they don’t feel any pressure. But they both got to where they got two completely different ways. You’ve got to figure out what your personality type is and what you’re comfortable with.
This sounds like it’s more about the strategy on getting to where you want to get to. I know some people are averse to having a lot of debt, even though it’s good debt and the tenant is paying for it. I can understand that person on your show, their thinking or mentality on just having that fifteen year mortgage amortized as soon as possible to have fourteen free and clear properties. I get that. That’s not necessarily the way I would’ve approached it. I would pull that equity out or some of it and redeploy it to build a larger portfolio.
That’s the great thing with real estate. That’s what I figured out on this show, is that 100 guests and they’ve got probably 100 different strategies. Everyone has a different comfort level with debt, everyone has a different comfort level with the type of properties they buy. It’s just a matter of figuring out what works for you and what you’re comfortable with. If you’re someone that is not going to be able to sleep at night because you have a lot of debt, then don’t have a lot of debt. If it doesn’t bother you because your tenants are paying for it, then take on a bunch of leverage. You’re going to be able to buy a lot more properties if you have leverage.
I agree. You’ll create your wealth a lot faster because you can get up to five times more the number of properties with the same amount of capital. This has a good segue to the next item here, which is buying for cash flow versus appreciation. I have these discussions all the time with investors.

It’s interesting. Where I live, I live in Northern Virginia. This is a market where you can’t cash flow. It doesn’t make sense so people buy real estate here for appreciation. It’s just in the culture around here that when you buy a house, people expect it’s going to go up in value. It doesn’t make a very good rental. If you have a lot of time to wait for the property to appreciate, over time, you’re probably going to make money that way. For me, I look at cash flow as more guaranteed and more scalable. If you’re buying a property and you know it’s going to be spitting up $300 a month, you can count on that and you can plan on that. When you’re buying for appreciation, it’s more of a gamble.
We have had people on the show that that’s why they buy rentals, is for appreciation. I think most of the really successful people with really big portfolios, they don’t care about appreciation. They’re buying for cash flow. It all comes down to what you’re comfortable with. If you want to build a big portfolio, if it’s not spitting up money every month, it’s going to be really hard to scale that. If you’re just breaking even or if you’re losing money every month, that to me is a recipe for disaster.
I think you need cash flow right from the very beginning because that’s an immediate, measurable, tangible return and it’s spendable cash that you can put in your pocket each and every month. I like to say cash flow is the glue that holds your real estate deal together. It is because it covers your overhead and expenses and your debt service. But I don’t like when people think of cash flow as being entirely separate from appreciation. It’s not an either/or decision. You can have both. That’s the investment philosophy that I like and that I like to talk to people about, is you can have appreciation and if you buy it in the right market, you will have appreciation. But let’s make sure that you have a good rate of return and you have a positive cash flow in that property. You’re getting paid today, you’re getting paid tomorrow and you will have equity growth over time.
You can do that in a lot of the markets that we’re in, all of the markets that we’re in, but many of the markets around the country. If you’re a gambler and you’re a speculator and you want to swing for the fences and try and hit that 10%, 20%, 25% annual appreciation rate, then maybe buy in the coastal markets like along California’s coast, New York, New Jersey, where you live. That’s possible. Don’t get caught with your shorts down. Markets can turn very quickly and you’ll lose buyer demand and all of a sudden now you’re stuck with a property that has no equity or maybe you’re upside down on.
That’s really the sweet spot where you can get cash flow and appreciation. I think the people that are buying purely for cash flow, a lot of the ones we’ve had on the show, they’re buying in neighborhoods that just aren’t going to appreciate.
C class.
C class properties, they are $30,000 houses that were $30,000 houses 30 years ago and they’re probably always going to be $30,000. They spit out a ton of money every month. That’s why they buy it. Personally, I agree with you that I think there’s a lot of money you can make in appreciation. If you can find something that maybe has a little bit lower cash flow but more potential upside, you may end up better off long term.
I just bought a new car for my wife. We were talking to the finance manager at the dealership. He started telling me the property portfolio he had here in California. We got deeper and deeper and deeper into this conversation. He’s sitting on hundreds of thousands of dollars in equity. I asked him a question, I said, “What do you think the return on your equity is?” He paused for a moment. He looked at me, he said and he raised his hand and he made this goose egg, he said, “Zero.” I said, “Right.” I said, “Guess what? You’re also in a very high risk market where the land cost is very high compared to the improvements.” I proposed to him, I said, “Think about this. Why don’t you take some or all of that equity and move it into a safer market, build your portfolio two, three times the size it is today and increase your cash flow all at the same time?”
He, again, paused and thought about it. He goes, “That’s definitely what I need to do.” He got lucky. I wouldn’t say that he completely planned out the appreciation gains that he realized here. There’s a lot of people out there, and this is my point, there’s a lot of people out there that were speculators, did well and now were sitting on a boat load of equity. The smart thing to do is to move that equity and leverage it, increase the cash flow and portfolio size that you have while getting out of harm’s way. I think if you’re one of those speculators or gamblers, as you called it, and you got lucky. Now, today you’re ahead of the game, make a plan and put a strategy and plan in place to increase your portfolio size and your rate of returns and your cash flow. Your next item is more for people who are hands on property managers or hands on investors. That is all about screening tenants.

More about systems, that you need to have systems for everything you do, whether it’s a system for how you deal with move in, move outs, screening tenants, doing showings, various tenant issues. Don’t try to wing it, have a system for how you do everything. That seems to be one of the big things that the most successful landlords are doing. They don’t just wing anything. They know exactly what they’re doing and have a system for every little piece of their business. I think that’s important. If you’re going to be totally passive and have a property manager, I’m sure your property manager has systems. That’s something that I would ask them. If your property manager doesn’t have a system for screening tenants, you might want to find a new property manager.
You’re talking about two things. You’re talking about having systems in place for everything, from move in to move out, showing, screenings. On top of that, you’re also talking about properly screening tenants. You mentioned a particular investor that, a husband and wife team that have had rentals for over 40 years and had tons of property.
They really have an incredible story. They’ve been doing this for 40 years and they’ve only had maybe two or three evictions. They’ve had hundreds of people renting property from them over that long period of time. It’s because they screen really well. I think that’s one of the things that I’ve realized, is that the people that are most successful with their business are screening tenants because that just makes your life so much easier if you have a good tenant in your property than having a nightmare tenant. You can’t screen it out 100%, those bad people are going to slip through. But if you do a really good job screening, it’s going to make your life a lot easier.
I think proper planning in the beginning avoids greater problems later on. It’s like that saying, “Measure twice, cut once.” That’s a good advice. The tenth item here is again, for the active managers, active real estate investors. It’s don’t chase tenants down for rent.

If you have a property manager, they’re probably going to do this. Most of the really successful people out there, especially the ones with more properties, they have their tenants set up on ACH. The tenants are paying their rent automatically every month. That really I think is something that everybody should be doing. There’s a bunch of websites out there where you can set it up so your tenant can login and pay their rent electronically. Don’t get into the game of trying to track down tenants to collect rent. Some people are collecting cash. I would just totally not even get into that business. As soon as you sign a lease with the tenant, put in the lease that they’re going to pay the rent electronically. It’ll make your life so much easier.
I agree. One of the things I did, because I bought my first property when I was eighteen, as soon as I turned eighteen, I jumped into my first rental. Back then, we didn’t have ACH. We’re talking a little while ago here. What I did is when I signed a lease with a tenant, I had them pre-write twelve postdated checks for me. I would take those checks and I would have them with me. I would never have to call them or have them mail a check, I already received the check. I would just simply deposit the check on the first of the month every month because I have twelve checks in an envelope for that property.
That’s a really good system too. That’s a good way to do it. I’ve talked to some people on the show that they have the tenants actually bring the check to their bank. That’s another way to do it without ACH. I like that idea of getting the twelve checks up front.
I actually don’t want to see the tenant. I might drop in every six months, but I really don’t want to see them. The less I see them, the better because I know things are just moving along.
Absolutely. The more you see them, the more they might bring up an issue that maybe isn’t an issue. I think you’re just better off the less contact you can have with your tenants.
That’s true. Good stuff. These are ten great points, ten great lessons learned from the people you’ve interviewed. Is there anything else you want to add or anything I didn’t ask you that maybe was appropriate?
There’s so many more. It was hard narrowing this down to ten lessons. There’s so many great tips that I’ve gotten through the show and just from talking to other landlords. I think this is good. I think probably the biggest takeaway, if you walk away with one thing, it’s you can’t do this by yourself, you need a team. Whether you’re going to buy a turnkey property or you’re going to do it on your own, you definitely need a team to help you out.
Agreed. You do. You don’t know what you don’t know. When you work with the right team, they will help you avoid the landmines that are out there and steer you in the right direction and keep an eye out for you. That’s what we love doing. I agree. Team is important. Dan, I really appreciate you coming on. This has been great information. Tell our listeners how they can find you or get more information.
My podcast is Rental Income Podcast. Wherever you’re listening to this podcast, you can probably find my show. My website is RentalIncomePodcast.com. Check it out. Let me know if you like it. I think it’s an interesting show.
It is. I appreciate you doing it. Thank you for being on the show here today. I’m sure we’ll have you on the show again down the road.
Awesome. I look forward to it.
Dan, have a good one. Thanks once again.
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