On the morning after Christmas in 2023, I had the opportunity to sit and visit with Jason Kenny, Mortgage Consultant and Sales Manager at Bailey and Wood Financial for about 30 minutes.

Jason has been active in the mortgage industry for over 17 years and has seen the ups and downs of the Real Estate market. [Full Disclosure: Jason is a client of Dan Baldini, and Polaris Property Management (PPM), and considers them a part of his Property Dream Team.]

Founded in 2007 by D. Mike Wood, Bailey & Wood Financial Group is designed to bring a simple concept to the home lending process focused on service as the key and the main thing that separates them from other lenders and banks.

Jason first met Dan Baldini and became acquainted with Polaris Property Management about 10 years ago while working as a loan originator, doing mortgages for a living.  Dan had the listing and Jason was working with the buyer when he met Dan they starting chatting about, as he worded it, “the whole rental property environment and opportunities.”

Jason shared that he now has a number of rental properties, or “doors” as they are referred to in the industry. The majority of them are single family homes. I asked why he decided to specialize in single-family and he shared:

Jason: I always kind of want to maybe dabble into multifamily, but that’s something that Dan doesn’t really do. He doesn’t manage a lot of the multi-unit type of property, like a four-plex or duplex or something like that. I pretty much just focused in on single family residences. But I mean, if something came up, you never know…

My first property I bought was in 2007 or 2008. It was not a good year for real estate. They were giving away houses back then and, you know, I was self-employed as a mortgage broker and pretty much commission only. I have been self-employed my entire life almost.

And so, when I moved here from New Jersey to Indiana right around that time. And (laughing) I was basically leaching off my wife at the time, she had the regular salary job and I was the one kind of hustling for loans and picked up my first property.


PPM. What key factors do you consider when evaluating a potential real estate investment opportunity? Can you share some insights on how you analyze the actual financial viability of a property?

Jason: You know, I target the area and the school systems, looking for a socio-economic area that I know is going to flourish or kind of getting in to areas like Fountain Square, or the Speedway area. I am looking for a good tax base. The majority of my properties are in Hamilton County, but they are becoming harder to acquire now due to the fact that the prices keep on going up. So, it’s kind of your normal ROI, your return on investment regardless.

I do my rent calculations. Dan’s provided me with some good rental spreadsheets to analyze a property, but you know, just your normal at eight or 9% at least. I want to see a return after all my expenses are covered.

I’ve been talking to Dan a lot about investing in the Speedway – it’s becoming more gentrified and being built up right now in this market.

If I’m analyzing a property, I want to try to get in on a semi-ground floor of an area that I’m seeing as ascending to becoming more profitable in a better rental base.

And crime rates play a role, definitely. Who cares what the rent’s going to be if my assets can be destroyed?


PPM: How do you handle property management responsibilities, and what advice do you have for new landlords in terms of property management?

Jason: Well, when I started out, I was self-managing five on my own, on top of taking care of two little kids, on top of working in a highly stressful, 24/7/365, mortgage real estate kind of job.

So, my first my first advice to somebody just coming out of the gate is don’t be too, too spooked or afraid in regards to what property managers are charging in regards to the rate or percentage of the rent. Everybody think that 5 or 10% of the rent that goes to a property manager is too much of your profit, and that’s how they shop property managers.

But there’s so much more involved in regards to what a property manager does and you’re going to have a lot more tertiary expenses – most good property managers are going to require a decent account for each one of those properties with enough money in them to cover incidentals and what have you.

I would not I would not basically take the jump into this need for buying your first rental property because it’s going to take up more time versus the money you’re going to get in that property.


PPM: When you when you look at a potential real estate investment, what kind of things do you want or key factors you target? What are you looking at? Can you share some insights on how you analyze the financial viability of a real estate investment, including cash flow and ROI calculations?

Jason: Actually, the first property we ever got, I got a loan on it and I put it under my wife’s name because I didn’t have the history of my employment at the time to acquire that first property. And today, without a good credit or job history, you’re not going to get a traditional loan.

As far as key factors to target – anywhere around universities is always a great place to start. I mean, you’re always going to have a captive audience there, right? Make sure the parents cosign, obviously, for the kids. But I look at universities, I look at areas that are up and coming.  An area like Fountain Square has already past the up-and-coming point.

You’re paying ridiculous cost for real estate out there. But I do like to try to find some diamonds in the rough. I like areas like Lebanon and Thorntown – all that area kind of outlying growth spots. The affordability starts spreading out from Hamilton County and Boone and even getting into those outlying areas that is being built up over there.

That whole Eli Lilly project going on by Purdue. You get a lot of people coming in there. It’s kind of anticipating what’s being planned five or ten years down the road in regards to the infrastructure and find places around there that are still relatively on the cheap.


PPM: You were working 24/7/365 in a stressful job, raising a couple of kids and having recently moved to a new area, so what challenges have you encountered as a real estate investor and landlord, and how did you overcome them?

Jason: It was definitely when I was looking at my bottom line or what I was making. Rentals are not my primary source of income. It’s basically my little mini 401k’s – scattered throughout Hamilton County and Boone and one in Marion County. So, I knew that that’s going to be a reward down the road when I get older and liquidate them.

But right now, in my prime earning years, I don’t want that to be my focus. You’re not making a lot of money on rural properties. It’s not as glamorous as everybody thinks it is. It’s more of a hedge against the stock market.

Okay. So, you don’t want to dump all your 401k money into one stock in your financial plan or you’re going to get crushed. Obviously, you got to diversify and, we don’t know what’s going to happen in this political landscape…right now.

But I know for a fact we’re in the Midwest, and property values are kind of steady. They don’t really fluctuate dramatically like on the East and West coasts. So, you’re not going to lose your butt right now on a real estate investment here in an area that’s highly desirable.

You’re not going to lose, but you’re not going to get rich overnight. I think a lot of people approach real estate as “I’m going to be rich tomorrow. If I if I get four or five houses, I’ve got it. I’m set.”  So, yeah, no, (laughing) no.


PPM: What role does networking, and building relationships, play in your success as a real estate investor, and do you have any tips for new investors in this regard?

Jason: I think of that most of the time when I’m filing my taxes! I have my dream team – I really have – Dan Baldini hooked me up with a really good CPA / tax attorney. And I have Dan, and I have a couple other advisors around me that I know.

I know what I’m good at and I know what I’m not good at. And you know, it’s worth the money and the time invested to find and have that dream team around you that’s going to make you successful.

It also helps to have good people around you and networking groups that have an idea of what’s coming down the pipes in different areas.


PPM: How do you approach risk management in your real estate investments, and what strategies do you use to mitigate potential risks? What are some common mistakes or pitfalls that new real estate investors should be aware of, and how can they avoid them?

Jason: One area is the length of the lease.  More than one-year lease? I don’t really do those, because as Dan would say, “you don’t want to get into a marriage, you want to make sure that you are going to be able to live with that person!”

People always use a strategy: “I’m going to sign a two-year lease.” Well, if you’re a horrible tenant, that’s not an incentive to me. It’s a great incentive for the tenant, but not for the landlord. You can’t raise rents as often which might be needed in a fast-moving market.

You have to be aware of market strategies.

And a lot of it depends on location. I do have one property in Zionsville. It’s a townhome and Dan manages that one. That’s really an area where I do get a lot of reloads – a lot of people that are the executives that are building a sizable house and then a low maintenance townhome is right for them now. So, they rent short term. On that particular town house I have agreed to six month leases before. The cost of turning over property is more than keeping people in there.

And a lot of people don’t realize that either. I mean, everything from carpet cleaning or replacement, to painting, to all the upkeep that’s got to take place, leasing commissions, before the new person moves in is lost income.


PPM: How do you stay updated on real estate market trends and changes in local regulations that may impact your investments?

Jason: I use my experts, to be honest with you. Yeah. I mean, I don’t really keep track of the the laws that are protecting landlords and the vice versa as much as I probably should.

Like I said, I have I have a real estate tax attorney that I consult with every year and during tax time to get an idea about what’s happening. It’s the best of both worlds.


PPM: Are there any specific niches within real estate investing that you find particularly lucrative or interesting?

Jason: I’m not interested in is flips. Flips are scary. There are too many things that can go wrong with the flip side. You got to have people that you can trust. You’ve got to trust contractors. You have to trust. There’s just so many aspects to it. And at the end of the day, after you get your profit and what the (short term) tax rate is on that, right.

It’s too much work and I had I figure out the ROI, the amount of time I’ve spent, emotionally and physically on a place like a flip. I tried one and I was like, I will never do it again.

You’re worried about all that time and effort you put into it.

I looked into AirBnBs for a while, especially when they were building Grand Park in Westerville. Yeah, I was definitely poking around there. I never did pull the trigger, but I did kind of dabble in some short-term rental prospecting at the time.

And again, I’m glad because you basically need to have somebody on full time. You know, it’s almost like managing a hotel. It’s almost like hotel management, one- or two-night leases. You’ve got to flip it and get it ready for the next person.

I’m 51 years old. I’m at the swansong of me wanting to continue to do this mortgage thing 100 miles an hour. So, no doubt, I definitely would love to buy an Airbnb or something in an area where I anticipate retiring too.

You know, I mean, a cabin in Tennessee or something like that where I could still rent it out and either own it frankly or almost frankly, by the time I retire and I just plop my button and retire.

Have somebody else pay for it and I sit there and enjoy it when I retire. Exactly.

I want to hold onto these rentals as long as possible. I want to make sure that when I actually do sell them, exchange them, or you know what, that I’m going to be in a tax bracket that is lower. So, I am not taxed out the wazoo on these places.

I will obviously dump the ones that are a little bit more of a headache from what I hear from Dan or myself, and hang on the ones that are performing well.


PPM: Can you share some advice on building a real estate investment portfolio over time and diversifying investments?

Jason: I tell people thinking about getting into this and just starting in 2024, we have no idea what’s going to happen this next year. It’s crazy.

I would say honestly, just either get yourself a good investor if you don’t have the liquid funds in order to acquire real estate, or find somebody that you can trust from either private fund standpoint.

I really understand from a mortgage originator standpoint, how much it would take to buy that first rental property, because most people that are buying their first rental property, they’re not sitting on $200,000 in the back pocket pay in cash.

They’re going to finance part of it. So that’s the first step.

And then how I basically did it was I would take any extra money I had, and I just hammered it, hammered it, hammered it, paid it off in like three or four years. I hate debt.

And then I utilized the equity in that property to buy the next one. I just continue down that road of doing it. I was at the point after my third property that I had enough cash and equity that I can come in with cash offers after my third property. Okay, it wasn’t really cash, but from a contractual standpoint it was cash.

I got a commercial line of credit. I now have a blanket over my own properties and I just wait to strike. You know, I have access to a line of credit right.

But so that would be my advice.

Just be very well-versed in property management and finances. Make sure you get yourself well versed or have great advisors.

If you really don’t know how to finance that first property and you go through the traditional channels like myself or if you have a private investor or somebody that you can trust. I did take one loan at one time where it was a private investor and they charged me at the time it was like a 9% interest rate (which is about what you can get right now in the traditional market).

So I did my ROI, my rent versus what my carrying costs were, and if it still makes sense right. So it’s like it just telling people don’t get too scared about the terms of financing unless you’re not making money – unless you know you’re in a red based upon the carrying costs of the financing.


 PPM: How do you handle unexpected challenges, such as tenant issues or property maintenance emergencies – when Dan calls and says, “Hey, we just lost the roof. And the hot water heater blew through the top and, your air conditioning systems have failed…”

Jason: (laughing) A lot of cursing. Seriously, I’ve been very frugal with my rental account in anticipation of knowing things can happen. And I like to have at least at least four- or five-months’ rent reserves for each property.

I mean, there’s been some difficult times where, you know, Dan calls and you hear the music, you know, the HVAC and furnace went out – $10,000 bucks. I’m like, “You got to be kidding me.“ But I do have those reserves and I do have the money saved up to allow for emergencies.

It’s tough to do after think first rental property. You know, you’re going to have to rob Peter to pay Paul a little bit. In order to make it work. But I had to do that early in my career. I mean, it wasn’t fun. I learned early that when that rent goes into the account, it stays there for that property. I’ll never co-mingle personal funds and rent funds.

Never. I’ll never pay a bill. I’m not going to go to the grocery store and use any money from that. I almost just make believe it’s not even there. The money and it just stays there in the rental account and it doesn’t hurt as much when you get that call.


 PPM: Do you have a separate account for each property?

Jason: No, I tried that and it was a disaster. I was going to have to hire a second financial advisor to keep track of all that.

That’s where my tax attorney came in and said, “Hey, you need to correct yourself. You’re a holding company, County Property Holdings LLC.”

Initially I had somebody advise me to put an LLC against each property which you title it that way but from a financing standpoint, an accounting standpoint, you need that umbrella company over every one of your properties. My properties right now are titled in their own individual LLC.

If anybody was to fall in front of one place and messes their hair up and they want to sue me, they can sue that entity and not the not the overwhelming one.


PPM: That leads into my next question – how do you handle risk management with your properties?

Jason: I’m not that good at doing it on my own, that’s for sure. Yeah. I mean, I have two rentals right now, one at one in most branches and nice, nice little old lady. Social Security income. She’s a hoarder.

I’m very compassionate, you know, more than I probably should be. And I’m always like the bleeding heart. She’s paying below market rent. She’s I have to basically she postdates her checks based on her Social Security income. But she she’s basically renting a place right now that she’s not going to come close to be able to get when she gets out of there.

But I have to dance. I’m telling you, I have to get her out of there. I mean, from a risk management standpoint, I’m not doing a good job there.

I’m not making the money I should be making on the property. It’s going to be more stress headaches for me.

And when she is out, I don’t even know what I’m walking into. I’m probably out of the property probably for six months. I don’t know if I want to walk in there, because she’s a hoarder.

But from a risk management standpoint, I just listen to Dan. I listen to Gary, my tax attorney. I listen to my financial advisor. My risk mitigation services are what I pay every month to these advisors.

I’m not a handy guy, so that’s another reason why, when I started to get more and more rental properties and I tried doing this on my own, I was getting taken advantage of by a lot of contractors I didn’t know too well.

So again, it’s developing an umbrella of trust, people that are going to take care of you. You’re going to pay money for those services I always said, you get what you pay for.

For contractors I trust Dan’s Trusted Advisors list, and I trust him for contract advisement. I do have some that I have known through the years of my own that I trust. But again, it’s hit or miss whether or not I can depend on them.

You know Dan always has those that he has vetted and Dan creates those expectations with his contractors so you never have to have that second thought that they’re not going to be there for you. When you tell the tenant somebody is going to be there Tuesday at 2:00 – they’re going to be there Tuesday at 2:00.

And I’m not the one getting a call from the tenant complaining that they’re not there or they were reviewed or God knows what else they complain about on everything under the sun.

I have the dream team, so I don’t have to keep up to date on tools, investment tools, maintenance tools and all that sort of thing. I let you let them take care of it? And my life is better because of it!

Big time. I mean the stress is gone from me. Self-managing versus not self-managing.

I see from both sides of the coin now because I’ve tried my way. I wasn’t working too well and it’s still not working well.

I will be a happy camper once I get those last two other properties out of there and then I’m going to turn those over to Dan as well.

(Laughing) Or I could let Dan get rid of that little old lady for me… I told her I’m selling the place. I hope she doesn’t read this! I just don’t need the drama anymore, and I can’t raise the rent on her right? She’s not going to be able afford to pay it. It is a bad situation.


 PPM: What’s your long-term exit strategies to get out of property management once you’re done?

Jason: I have a seven-year-old daughter and a 11-year-old daughter, once they get in the college is when I’m going to start thinking of unloading those properties. So, in the next, seven or nine years I will start unloading them in a way that my taxes will not be majorly impacted. Once again, that will be with advice from my Dream Team.


PPM: One last question. Is there a success story or some valuable lesson that you learned from your time in real estate and this investment journey so far?

Jason: Since I’m a loan officer, you know a lot about somebody based upon their credit report. It will not tell you if they are down or a success story, but just things to look out for.

Somebody’s credit profile is a guideline but it doesn’t always tell you the full story.

I would always, when I was showing a prospective tenant a property, let them go inside and look around.

Then I would walk outside and take a look at their car and I peek inside. That car was, if it had stuff in it, on the seats, the floor, the back or font dash was how my rental is going to look like. That’s always a little trick. I always look to see how they manage what’s going on in their automobile.

And that’s one thing in the early on that, I mean, knock on wood I’ve only had to evict two, I think two tenants my entire time from doing this. I had to do one, and Dan, while he was managing my property has had to evict one. I knew an eviction attorney at the time before I met Dan, so I just basically took his guidance. It wasn’t fun. It’s not a fun situation now.

Success wise, I’ve been kind of analyzing people about getting a loan as an originator. I take that same mindset with the renter. You know I’d say, what is your debt-to-income ratio now? What’s going out every month versus what’s coming in every month?

I have been able to ask “this this ratio concerns me. Please explain to me how you’re going to be able to afford this rent.”

All those kinds of things really help me out.

I think I am very conservative in regard to credit score and debt. I know that credit modeling system is kind of skewed sometimes or not fair if somebody’s been paying their bills on time for the past five years and all of a sudden, they got a collection from utility company or a medical bill and their credit score goes down 100 points. I don’t penalize people as much on credit scores as I did, based on job history, job income, stability. I want to make sure that they can afford the rent.


PPM: Anything else you think would be great for investors in any way?

Jason: Being a landlord is a tax write off machine. Really. It is. This is it. There’s so many ways you can be creative in in regards to creating tax benefits for yourself and your family by investing in real estate that you wouldn’t be able to experience with a W-2 job or, just going on your merry way. Okay, So it’s good tax haven. And that’s where your tax attorney is going to come in.  Use your Dream Team and remove the stress and maximize your returns.