Skip to main content
Optimal Finance Daily

3467: How Many Toilets Do You Own by Joel of 5AM Joel on Hidden Costs

9 min episode · 2 min read

Episode

9 min

Read time

2 min

Topics

Personal Finance, Investing, Fundraising & VC

AI-Generated Summary

Key Takeaways

  • True cash flow reality: Rental income is not profit minus mortgage. Joel's properties consume 75–80% of gross revenue in expenses: roughly $1.07 in bank interest, $0.60 in taxes, $0.18 in insurance, and $1.14 in maintenance per flush cycle, leaving landlords paid last.
  • Expense forecasting first: Before purchasing any rental property, account for all ongoing maintenance, repairs, and potential disasters upfront. Underestimating these costs eliminates any remaining cash flow entirely, making thorough pre-purchase expense modeling a non-negotiable step in the evaluation process.
  • Quality over quantity: Owning four $50,000 properties does not outperform one $200,000 property by default. Joel abandoned his arbitrary goal of 100 rentals after learning that a few high-quality, carefully evaluated assets consistently outperform many cheap, low-grade ones.
  • Fix-and-flip skill gap: TV renovation shows omit the expertise required — construction, electrical, design, and project management experience all matter. Beginners should study resources like "The Book on Flipping Houses" and HouseFlippingHQ.com before attempting a rehab project independently.

What It Covers

Joel of 5AM Joel reframes rental property investing by calling properties "toilets," using humor to expose hidden costs, debunk passive income myths, and warn beginners against quantity-over-quality thinking and fix-and-flip TV fantasies.

Key Questions Answered

  • True cash flow reality: Rental income is not profit minus mortgage. Joel's properties consume 75–80% of gross revenue in expenses: roughly $1.07 in bank interest, $0.60 in taxes, $0.18 in insurance, and $1.14 in maintenance per flush cycle, leaving landlords paid last.
  • Expense forecasting first: Before purchasing any rental property, account for all ongoing maintenance, repairs, and potential disasters upfront. Underestimating these costs eliminates any remaining cash flow entirely, making thorough pre-purchase expense modeling a non-negotiable step in the evaluation process.
  • Quality over quantity: Owning four $50,000 properties does not outperform one $200,000 property by default. Joel abandoned his arbitrary goal of 100 rentals after learning that a few high-quality, carefully evaluated assets consistently outperform many cheap, low-grade ones.
  • Fix-and-flip skill gap: TV renovation shows omit the expertise required — construction, electrical, design, and project management experience all matter. Beginners should study resources like "The Book on Flipping Houses" and HouseFlippingHQ.com before attempting a rehab project independently.

Notable Moment

Joel reveals that his six-figure annual rental income sounds impressive until you learn that nearly 80 cents of every dollar disappears to expenses before he receives anything — a ratio most new investors never anticipate.

Know someone who'd find this useful?

Episode Transcript

Starting a business means juggling a lot, and not just what customers see. There's operating agreements, compliance filings, and legal paperwork that all make up your business identity. That's a lot to manage on your own. Start your business with Northwest Registered Agent. They help you get more for your business, more privacy, more guidance, and more resources. Northwest has been helping small business owners launch and grow their businesses for nearly thirty years. They're the largest registered agent and LLC service in The US, with over 1,500 corporate guides, real people who know your local laws and can help you every step of the way. With Northwest, privacy is automatic. They never sell your data, and they give you free tools like operating agreements, meeting minutes, and thousands of how to guides. Don't wait. Protect your privacy, build your brand, and get your complete business identity in just 10 clicks and ten minutes. Visit northwestregisteredagent.com/ofdfree and start building something amazing. Get more with Northwest Registered Agent at northwestregisteredagent.com/ofdfree. This is Optimal Finance Daily. How many toilets do you own? By Joel of 5AM joel.com. Newbie. Real estate investing sounds so cool. How many rental properties do you own? Me, I own 22 toilets. Newbie, I was asking about your rental houses. Me, I know. Let me tell you. Somewhere in Texas, there are 22 toilets that I own. Right now and throughout the day, people are stinging them, flushing them, clogging them, abusing them, peeing all over them, breaking them. And I'm the lucky landlord that gets to fix them and pay maintenance. Newbie, wow. I guess owning rentals isn't so glamorous after all. Maybe real estate isn't for me? I've had this conversation many times. When young people hear that I own a few rental properties, their eyes light up. From the outside, real estate investing can sound so sexy and cool. But the truth is that the term rental property is covered with glitter. Owning a rental property comes along with a whole lot of shit, literally. Rental property, a k a toilet. I'm referring to rental properties as toilets for a few reasons. Number one, to expose rental properties for what they truly are. They're just assets. Number two, to extinguish any romantic attachment to real estate. Investing is about numbers, not feelings. And number three, because I think potty humor is funny, and I am cracking myself up while writing this. Don't get me wrong. I'm certainly proud of my investments. The toilets I own are making me money and slowly growing my wealth. But make no mistake. There is hard work involved, and my toilets will only perform well if I keep plunging them regularly. Here are a few other related conversations I have with new and young investors. The rent collection process. Newbie. I can't wait until I'm a landlord sitting back and collecting rent checks. Rental income minus mortgage equals profits. Me, actually, it doesn't really work that way. First, my property …

Get the full transcript (1,624 words) + summary by email — free

One-time email with the complete transcript and AI summary of this episode. No account needed.

One email, no spam. We’ll also show you what SignalCast does.

Browse all Optimal Finance Daily transcripts →

You just read a 3-minute summary of a 6-minute episode.

Get Optimal Finance Daily summarized like this every Monday — plus up to 2 more podcasts, free.

Pick Your Podcasts — Free

Keep Reading

Books, tools, and gear mentioned in this episode

SignalCast may earn commission on purchases via these links. As an Amazon Associate, SignalCast earns from qualifying purchases.

Books

Tools

  • Beginners should study resources like "The Book on Flipping Houses" and HouseFlippingHQ.com before attempting a rehab project independently.

More from Optimal Finance Daily

We summarize every new episode. Want them in your inbox?

Similar Episodes

Related episodes from other podcasts

Explore Related Topics

This podcast is featured in Best Finance Podcasts (2026) — ranked and reviewed with AI summaries.

Read this week's Investing & Markets Podcast Insights — cross-podcast analysis updated weekly.

You're clearly into Optimal Finance Daily.

Every Monday, we deliver AI summaries of the latest episodes from Optimal Finance Daily and 192+ other podcasts. Free for one show.

Start My Monday Digest

No credit card · Unsubscribe anytime