Building Wealth through Smart Rental Investing

Episode Overview

Host: Daniel Shaked (Home365)
Guest: Dani Beit-Or, Founder & CEO of Simply Do It
Duration: ~67 minutes
Topic: Educating new investors on quality-first single-family rentals, realistic underwriting vs. Excel myths, leverage & negative cash flow, property management realities, market selection, and long-term wealth building.

Key Topics Covered

• Getting started safely: “boring” quality SFRs in solid suburbs vs. chasing high-yield trouble
• How to read the pro forma: buffers, variability, and multi-year thinking
• Leverage choices (20–30% down), stress-testing negative cash flow, and investor psychology
• Running rentals like a business: setting PMs up for success and “extreme ownership”
• Creative financing (VA assumptions, subject-to) and mid-term rentals (insurance/displacement)
• Markets Dani likes (Greater Nashville, Birmingham, STL, KC, etc.) and ones to avoid (e.g., Austin)

Complete Detailed Transcript

[00:03] Daniel Shaked: Welcome to Real Estate Investing Open Kimono, a Home 365 podcast where we discuss real estate biggest traps and failures with brutal honesty and radical transparency. I’m Daniel Chakad, the founder and CEO of Home 365. And here we dissect what goes wrong so you can sidestep the pitfalls and make smarter moves. No fluff, no hype, no sales pitch, just the raw truth, everything you need to know in order to win. Let’s dive in. Today with me is Dani Beit-Or. Dani Beit-Or is a seasoned real estate investor and a founder and CEO of Simply Do It. With over 20 years of experience specializing in US residential real estate, originally from Israel, where I’m from as well, Dani transitioned from the engineering and high-tech backgrounds into real estate investing, navigating more than 5,000 investment transactions across multiple markets. Known for his personalized approach to investment strategy, Dani helps investors from beginning from beginners to experience to grow and optimize their portfolios through extensive education programs, seminars and mentoring. He shares practical insights and lessons learned, including critical takeaways from navigating the 2008 market crash all the way to current days. Dani, I’m so happy to see you here, man. I don’t know. People don’t know. But when I first moved to Israel to the United States, Israel was like what? 10 years ago, you were the first person that inspired me a lot. I was learning everything I could about real estate investing. And I don’t know if you know that, but I actually purchased a very sophisticated Excel you’ve built back then, like 10 years back to analyze on the back of a napkin, various real estate deals. I have it still with myself. You look surprised. Probably don’t even remember that.

[01:56] Dani Beit-Or | Simply Do It: Yeah. My, my, my, any Excel analysis?

[02:02] Daniel Shaked: It was your Excel analysis, yes? The answer? Exactly. So it was a…

[02:03] Dani Beit-Or | Simply Do It: Really? my God. I get the chills from this introduction. I get nice introductions, but this is so personal and inspired you and wow. Wow. Thank you. I’m sorry. Wow. Wow. I’m done. We can finish up now. I’m done. listen.

[02:18] Daniel Shaked: yeah?

[02:18] Daniel Shaked: Yeah, perfect. Look, no, no, look, I was learning. was I was trying to learn as much as I can about. I’m done. I got a goose bumps. OK, cool. No. Yeah, for real money. That’s OK, OK.

[02:34] Dani Beit-Or | Simply Do It: I do, do. 10 years ago, purchased my Excel. Wow. Amazing. It’s evolving a little bit. Good. Good. Excellent. Excellent. Thank you for the kind words.

[02:44] Daniel Shaked: Look, I was trying to learn as much as I can, you know, being an international investor, looking first at building company, a property management company in the United States, but actually I wanted to be myself an investor. And I was trying to understand the different markets, different things, all the possible things. And I stumbled upon you. You were very active back then at the Silicon Valley where I started the company. And I learned a lot from you. So look, go ahead and tell me a little bit about, simply do it about yourself, about your background, and we’ll take it from here, okay?

[03:21] Dani Beit-Or | Simply Do It: Yeah, so wow, it’s amazing to say that and inspired you and use the Excel. I love it. I love hearing it. I’m glad that that’s the whole purpose. You and I, obviously we know each other for probably around 10 years or so. We talked many times in the past. I do have to return a courtesy by saying. The only person in the past 10 years, actually I should say more than 10 years, that called me up one day out of nowhere and said that he has some crazy idea about property management was you. And my initial reaction was, another one, sorry, I have to admit, but then I said, you know what? I love listening and then you start outlining the vision when Home 365 was just, I guess incubating or maybe more than just an idea and your outline, I was memorized. I still remember where I stood having this conversation, letting you walk through and I think my reaction was, listen, if you accomplish. a fraction of what you just told me, it would be amazing. And you had this much of a vision. And I told you, if you do half of it or less, you will be amazing because this industry is so positioned still. Our conversation that I’m talking about was more than five years ago, probably seven years ago. I don’t know exactly. And. I still think that there is one entity that I see and I am in this property management side a lot, a lot. And we’ve done many things on our end as well. And one entity, one company that I know that are really changing the playing field completely. And it’s amazing. So good for you. Yeah.

[05:17] Daniel Shaked: Thank you. I appreciate it. One thing I blame you though, you were not stubborn enough to tell me don’t start with it. No, I’m just joking. I’m just joking. You should have. should have.

[05:25] Dani Beit-Or | Simply Do It: Ah, I apologize, I should have. I know how this works. But listen, I moved to the States. I started investing while being a young engineer in Europe, 2002. I packed my bags and my wife and my bike and moved to the States in 2004 with only one mission in life was to dive into real estate. That’s it. I didn’t see anything else in my mind. And I invest, continued investing a little bit and worked with others, helping them invest. It kind of grew from that. I was able to accomplish my personal financial goals of five years within two and half years. So that was really nice. And then 2008 came and kind of. completely changed things around. For me, the 2008 crash was not, it was devastating financially, emotionally, stress, everything. No, no, no, I’m not gonna sugar, you said early, this is not sugar coating session. This is harsh, not harsh, but raw in reality, R and R. But the 2008 crash forced me to dive into the details of everything, like nuances on nuances on situation on, you know, there’s so many different state laws regarding different situations. You know, I can, I always remember I actually found out that there’s a different foreclosure implications if you are purchase money for closing on, or if it’s a. cash out refinance for closure situation, In Arizona, which is different than Alabama, whatever. The nuances one says, it’s not that interesting, but I had to dive in. And that actually elevated my expertise, knowledge, experience. And everything I did back then was everything was amplified because I had multiple properties. But because I was engaging with a lot of investors,

[07:12] Daniel Shaked: man, yep.

[07:34] Dani Beit-Or | Simply Do It: Everything I did, I always in the back of my mind, I learned something I will share with my clients, with my investors. will, some of them, many of them are in similar situation. And I remember so many heart, know, heart, like sad conversation, devastating conversation with my clients and saying, listen, you can do it and sharing. Hey, you can do this. Have you thought about this? And then sometimes they will say, Hey, I’ve done this. About short sale, did you know that you could do something like that? And I’ve gained that knowledge as well. And that elevated my knowledge of real estate and nuances. But also, the most important thing is in 2010-ish, I decided that I need to build everything from the ground up from scratch. One of those pillars of operational pillars is the Excel you were talking about, which we still use. I’m in version 6 now. You’re probably in version 1.

[08:30] Daniel Shaked: Really? As a first subscriber, don’t I receive, not entitled for like an upgrade?

[08:31] Dani Beit-Or | Simply Do It: I mean version six, the core of it is.

[08:36] Dani Beit-Or | Simply Do It: You were cheap at the time you bought the version instead of the life, know, the life. But as of a special friend, I will share with you, the core of it is exactly the same. We just beautified it, I do more things. So the engine, the core analysis engine, still the same, right? It’s how it’s perceived, how to use it around it. I’ll share with you gladly.

[08:44] Daniel Shaked: got it live subscription got it got it

[09:03] Dani Beit-Or | Simply Do It: So that’s kind of brought me to the place where I started simply doing everything on a canvas. How do I go about analyzing properties different than what I did before? You just got the end of it. How do I go about evaluating? What’s my protocol about selecting in a market? Selecting a team. There’s a process on selecting a team I work with, like property managers and lenders. Sorry, property managers and realtors. And there’s a process of onboarding a team, right? It’s two different things. And then how do we support them? So we support a lot of those teams on an ongoing basis because my philosophy is if I have a good realtor and they understand what we’re doing, if I help that realtor do their job better, the entire system gets better. And the same thing with the traditional property managers. I will say, because this is relevant for you, I am a living organism of scars of never stop being frustrated with the traditional property management operation out there. And I’ll be honest, some of the property manager that I work with are what you would probably qualify in this industry, the better ones, the good ones, right? All of them are good. I don’t have bad ones, but even the good ones will never, none of them will, you’ll see that they’re like superstars, right? And I do have great ones that

[10:28] Daniel Shaked: Be perfect.

[10:33] Dani Beit-Or | Simply Do It: do a terrific job, but there’s always a challenge. It’s a challenging industry to be in. maybe this is your opportunity to get inspired again and run, Daniel, run. Move out.

[10:47] Daniel Shaked: I heard on one of your recent podcasts, I think the last one maybe, there was a section you were talking about property managers and you said like, can’t understand why people have even do this type of non rewarding job, right? It’s so non rewarding, you are sandwiched in between the tenant and the owner. And sometimes you are stuck with a very problematic property and the property manager can do that much.

[11:01] Dani Beit-Or | Simply Do It: Unbelievable. Yes.

[11:15] Daniel Shaked: So we’ll chat about that going forward when we touch the property management aspect maybe. But keep on. I’m curious about the journey.

[11:24] Dani Beit-Or | Simply Do It: Yeah, so basically after the crash, the focus has always been buy long-term rental properties. Typically it’s out of state. I’ve been helping our clients buy in Oklahoma City, Dallas, Fort Worth, Houston, greater, greater, greater, greater Nashville, Birmingham, Alabama, St. Louis, Kansas City, Atlanta, Tampa, Orlando, I may be missing one or two or three.

[11:26] Daniel Shaked: So now…

[11:53] Dani Beit-Or | Simply Do It: Phoenix for many years and usually the model has always been long-term, buying whole, nice residential, mostly single-family homes, duplexes, fourplexes. And over those years, I have a tendency to challenge, in my personality, build into what I call, what someone told me, actually some consultant said, it’s called challenging the status quo. And me challenging the status quo has always been challenging it. towards others like property managers, right? Or different opportunities that we’re doing, but also internally. Also internally, meaning I keep challenging myself and never rest on just because we’ve done something in a certain way, we should continue doing it exactly the same. And the markets are evolving. just as a kind of funny little anecdote, For 20 years, I always avoided investing in greatly creative financing transactions such as Subject 2. I am well familiar of Subject 2. I can explain what that is if we need, but it’s like a type of subcategory of seller financing. And I always saw, because of my knowledge, the complexity. So I was always afraid of it. I’ve done my first Subject 2 deal in August.

[12:59] Daniel Shaked: OK. Yep.

[13:19] Dani Beit-Or | Simply Do It: actually experienced some of those smaller challenges, not the major ones. I joke that, sorry, I’m under contract right now for VA loan assumption, right? So another deal that’s something I’ve been aware for more than 20 years that I’ve never done, I’ve bought another property a month ago with a seller lease back and an option to buy the property from me in two years at a set price. And I’m already for close evicting the tenant because he’s not, like a month. And I’m already, I already filed for eviction, which is not nice. And I don’t care because I bought that property, $120,000 below market value. So fine. I don’t mind evicting. I mean, I wish he would be okay, but he’s not. So I’m making those examples because I joke. See, I laugh at myself.

[13:56] Daniel Shaked: creatives.

[14:13] Dani Beit-Or | Simply Do It: It only took me 20 years to build up the confidence to do a subject to VA loan and complicated deals. And every time I do those complicated financing deals that I’m right now dealing with more like this is I always see it as this is I need to fully understand, experience myself, and then I can systemize it. I can prep it. I can understand it better. And then I can go if it works. and offer it as another option for my clients to buy way to buy properties.

[14:47] Daniel Shaked: So let me ask you, so you’re basically helping people for quite many years to tap into real estate investing. Some of them are, as I mentioned in my introductory talk, are new people. Some of them are not. If I am, let’s say, a remote investor, let’s say I’m an international guy from, I don’t know, from Israel, from Japan, from Europe, from whatever, and I come across you, what would be the type of property that you would recommend me to buy? And I mean, and in which type of the market, not a specific city, but which type of the market would you advise me to go?

[15:22] Dani Beit-Or | Simply Do It: So there’s two layers here of the decision making, whether you’re local or out of the country. If you’re a beginner, from my experience, based on my 20 plus years, 5,000, many hundreds of clients in the process. So first of I don’t come with my own set of what is the right or wrong. I just set the framework.

[15:40] Daniel Shaked: You have all the experience in the world. Yeah.

[15:50] Dani Beit-Or | Simply Do It: I’ll let the clients help. I help the client determine what is the most suitable avenue path for them. But usually with the beginners, I like to recommend to keep it simple, right? Especially if you’re out of the country, there’s so many gaps, language, time, culture, who pays for what kind of a thing, who manage, like I know that if you have a property in somewhere else, you may. the tenant may be carrying more of the burden of the property and have, for example, you mentioned Israel. In Israel, it’s very common that the tenant, the security deposit is not a deposit. He’s giving you like so much security that in a way, if you think about it, it’s in his best interest to take care of and not to break the lease, because that’s going to cost him a lot of money. Here, one month rent, maybe two months if we’re lucky, maybe two and a half, whatever, right?

[16:26] Daniel Shaked: Thanks for everything.

[16:46] Dani Beit-Or | Simply Do It: So even if we are able to get more out of the situation here, then the tenant is risking two months of rent. Most of the tenants are not life-threatening. If this was 10 months of rent or 10x of the security deposit, they will behave differently. So that creates a little bit of a difference. Now, it doesn’t mean all tenants are bad. I’m just saying the leverage.

[17:11] Daniel Shaked: So what would you recommend? would you recommend to me? Let’s say I’m an international guy and I’ve never done it before. What type of property?

[17:16] Dani Beit-Or | Simply Do It: Yeah, let’s say, let’s buy a nice single family home in a nice community. Maybe brand new from the builder, maybe up to 20 or 30 years old in the suburbs, good schools, very straightforward. You know what? The American dream. Simple as you have it in your mind. I have it in my mind. Those are the houses that I like. We keep it simple.

[17:41] Daniel Shaked: So you know what? I really rely on that and I accept it so much because there are a lot of gurus, what I call them. They teach you everything about the most riskiest properties. Go for Section 8 in Detroit, in Chicago. Go for the lowest property you can find. $60,000, whatever. And amazing excels. You see like 12%, 10%, 8%, whatever cap rates. Crazy numbers, this Excel has amazing ROI to it, but there is a reality. And a lot of those gurus don’t explain the reality, what it means really Section 8, what it really means the tough parts of a city. What type of hell can happen? Like do you have like examples probably from your turn?

[18:26] Dani Beit-Or | Simply Do It: Absolutely.

[18:31] Dani Beit-Or | Simply Do It: Absolutely. Yeah, I always stayed away. I love boring real estate, right? Boring real estate means I can live my life wherever I live with work and family and whatever life activity and the real estate is more passive-ish in my life. I don’t, you know, I’m not day to day or week to week kind of issues and you know, there’s some weeks are busy or some weeks are not but… It’s kind of more in the background, and I can easily duplicate it. I can buy multiple such properties. What I see a lot of people do is they are attracted, especially investors, attracted to the lower end property, which is usually an older property in a more challenging kind of a neighborhood, section 8 or not, with less of a stable kind of an income tenant. And that is a big piece. of a noisy system. Now, you’ve got to understand, like you said, if you understand that this kind of an investment is not bad, I’m not making it sound bad, it’s just how much noise in the system you will have. I call it, the noise in the system is also the emotional ROI that nobody calculates. Noise in the system means a lot of problems. So, more issues, more problems, such as maybe turnover, late tenant, maybe evictions, all the properties. When there is a repair, many times it’s not just replacing a water heater. You need to elevate the base of the water heater and put the strap and the expansion tank. And all of a sudden, a $900 water heater, it’s a $1,500. Same thing with the roof, because the building codes change. and no licensed person will do it without updating the building code. When you’re far from the property and those situations keeps coming, but they don’t show it on Facebook and they don’t show it on Instagram, there’s only one entity that’s in fault. And it’s not me, the owner. It’s always the property manager’s fault, always. And I keep telling people, why did you buy the wrong property that you set up yourself, not for failure? but for this kind of a setting. No wonder you think that the property manager is clueless and worthless and a crook. It’s wrong. You bought the wrong property. You should be expecting those problems. Now you blame someone else.

[21:00] Daniel Shaked: Dani, what you are saying I rarely hear from real estate investors or from the gurus. because usually people do blame everyone else but themselves for wrong choices. And like any risky investment, might be a stock on a pink sheet or some isoteric stock there. It might be very volatile. It has risks associated.

[21:13] Dani Beit-Or | Simply Do It: Not too slow. for it.

[21:28] Daniel Shaked: And if you can stand the volatility and the problems and the risks associated with this investment, then maybe you are ready to go all the way for challenging parts of the city and challenging properties. But look, I rarely see investors, especially the new ones, not the experienced, but the new ones that really understand that rental property is not a property, it’s a rental business. And you need to treat this problem. Say again.

[21:52] Dani Beit-Or | Simply Do It: You’ve been listening to my podcast You’ve been listening to my podcast I always say I call it a tiny business By the way, it’s the perfect tiny business because nowhere as a business owner You have a very clear here is the here is the here is the business the property your business has one client and that client

[21:59] Daniel Shaked: You said that? I didn’t hear that, but okay. Great minds think alike. I mean…

[22:17] Dani Beit-Or | Simply Do It: is signing up to be your client and adheres to the rules. As a business, you never sign up your clients like this. And then you have one employee or a part-time employee or a subcontractor called the property manager. And I tell my clients, the property managers, the good ones are people. They have multiple clients and they don’t know which client is gonna behave in what situation in different situation. Like one wants to immediately start a victim. And one says, wait, wait, wait, talk to the, talk to the tenant and see if you can work it out. The property manager doesn’t know which client will, it will be in which way, but it’s your responsibility. It’s your business, your tiny business. It’s not your property manager. You need to supervise, make sure they’re fine. And I teach my clients, say, and don’t, don’t wait for your property manager, which is AKA your employee, your part-time employee. It’s not your property manager.

[23:01] Daniel Shaked: So love it. I love it.

[23:17] Dani Beit-Or | Simply Do It: Don’t let them do mistake and you’ll be disappointed or expecting it. Completely different narrative. You call the property manager every once in a while, say, hey, remember you need to do this or you need to that. I just want to make sure you didn’t forget about this or for it. I call it set up your property manager, AKA your employee, to succeed, to success, because it’s your asset, not theirs. So all of a sudden this entire conversation with your employee is different. You’re trying to see what they’re failing, you’re trying to see how you can empower them to succeed in your best interest.

[23:48] Daniel Shaked: is different. Look.

[23:56] Daniel Shaked: I wish most of the real estate investors would understand this specific thing that rental property is a business and as a business, it should be attracting the right clientele, the right customers you want to attend your business. Those people are paying you a recurring monthly revenue for the experience of housing. This is where they raise their families. This is where they build their memories. And unless you want to invest into this property. It’s like buying a restaurant. You can buy a very cheap restaurant which is failing, whatever, for a good deal. But if you don’t know how to create the menu, you don’t know how to serve good food, you have no customer service approach, then this restaurant is going to bust or it’s going to attract certain people which will create problem and troubles for you. So this mindset of, I’m owning a business and I want to run it.

[24:41] Dani Beit-Or | Simply Do It: That was

[24:54] Daniel Shaked: as any other business that I might be owning like a store, like a restaurant. And yes, I have a CEO, I hired a manager who runs that business for me. But this CEO or this manager can’t really take a super crappy type of business with a crappy owner mindset, with the slum landlord mindset and make it the Polished diamond. And usually property managers are not creating the problems, they’re trying to solve the problems that are

[25:18] Dani Beit-Or | Simply Do It: Court.

[25:24] Daniel Shaked: popping up every day, right?

[25:26] Dani Beit-Or | Simply Do It: Absolutely, it’s exactly the case. And this is exactly those are I always used on those analogies I use actually the pizza parlor versus, you not a restaurant because it’s more complicated to simplify illustrate and I and you know Daniel it’s it’s it’s we’re diving into this this Aspect I’m in the process of finishing My clients when they buy with us for more than 10 years, probably 12, 15, only our clients not open to the public. give them, soon as they buy the first property, we give them what I call the owner crash course. The owner crash course.

[26:03] Daniel Shaked: Close.

[26:10] Dani Beit-Or | Simply Do It: is a video 45 minutes, an Excel file with checklist of things you need to make sure with your property right off the closing, and a guide. And the owner crusher says, here are the typical mistakes, problems, issues that will come up with the management of your property if you’re aware of them.

[26:28] Daniel Shaked: Which… Which definitely will come up.

[26:31] Dani Beit-Or | Simply Do It: You’re aware of them? If you’re aware of them, when you know something will happen and you are expecting it, you’re less surprised. And here’s how you can avoid it for happening to begin with, right? And when I introduced that owner crash course about 10 years ago, maybe 12, I don’t remember exactly, the number of support calls that I was receiving right after, 80%, 80%.

[26:56] Daniel Shaked: Lend down. Wow. Wow.

[27:00] Dani Beit-Or | Simply Do It: Right? What did I do? I calibrated their expectations. I mentioned what are the classical fail points and suggested ways how to mitigate in advance. 80%. Now on the top of that, I do twice a year reminding them, here’s the things you should be doing as an owner. Property management is part of it. know, insurance, property taxes, this, that. Just so I don’t let my clients let their guard down with their Property not the property management, which is one aspect of it twice a year a reminder Take those two things as of the past few months I mesh them in and I created a new guide for my owners and you know, call it I call it extreme ownership Because I want to kick my clients in the butt because I think they’re not doing enough, right? Although they have all those tools I think they’re not an extreme ownership for me means it is your in your