This article is transcribed from Episode 24 of The Accidental Landlord. Listen to the full episode, here.
Welcome to the podcast, Craig!
Thanks for having me! I appreciate it.
We hope our listeners can learn from your experience. Why don't you take a moment to let our listeners learn more about you?
We started invest in real estate back in 2-14. At that time it was a side-hustle and my wife and I were working in corporate America: super busy. We realized that real estate was the way to go to move forward from a wealth perspective. We started purchasing multifamily real estate buildings. They were just 3-4 unit buildings. Then we built a large enough portfolio that we were able to leave our jobs a few months ago, so my wife and I are both focused on real estate investing.
We're passionate about helping others grow their wealth through real estate, and that includes helping them find other opportunities to invest.
Not only did you leave your job, but your wife did as well.
Yeah, about six months apart. My wife went first. We didn't strategize that I would take another six months and leave but we were in a place where she was helping move things forward while I was working, and I realized that we had enough momentum that we could both leave. We haven't replaced our income yet, but we have enough momentum that we will be able to within the next few years.
A lot of people want to leave their jobs for passive income. I left my job at the fire department a year ago and had built up enough passive income where I was able to take the leap. what was your experience like?
We spent five years working towards the point where we could leave and we couldn't hold off any longer. Risks are limited because we can return to corporate America at any point if needed. We have enough money set aside so we started selling a few properties, and now we can focus on real estate solely.
That's awesome. Let's talk about your first property.
Sure! We started in 2010 by buying a two-bedroom condo. Shortly after that, my employer asked me to move to Puerto Rico and we had this condo we had just purchased. Instead of selling it, because we didn't know what would happen, we decided to rent out each of the bedrooms and the parking space. We managed it ourselves from Puerto Rico and it really went quite well. The cash flow was good, but not significant. It was enough to pay the bills and not be stressed about paying taxes or the mortgage.
When we really started investing in 2014, we had to move to New York. I was getting tired of my corporate job and felt there had to be something else out there. We decided that real estate would be the path to become our own bosses. I started educating myself through listening to podcasts and reading books.
We started purchasing small multifamily, 3-4 unit buildings in New York. Eventually, we had accumulated nine properties and about 35 tenants.
At what point did you feel "good" at it? at what point did you feel like you had management down?
I would say I was sweating profusely after the signing of my first property. The second and third one, you get more comfortable with the process. Then we started buying properties in other states without ever seeing them. We'd have a real estate agent and a good inspector, but we focused more on the cashflow making sense rather than the property itself.
I think it speaks to looking at your real estate investments as a vehicle that provides a return. one of the pain points we have is that it's hard for clients to return that they're turning their home that they lived in, into a business. you have to try to let go of sentimental attachments and emotional decisions. It's now a business.
I couldn't agree more. It does become something that's your baby, and managing it as closely as possible. But you really do need to treat it as a business. You can't scale that way. You need to forecast your cashflows, you need to pay attention to the financial statements and stay on top of it, because it can get out of hand quickly. Before you know it, you can eat away your finances by the end of the year.
You also have to identify when something isn't working out, or when you have to get rid of a property.
There isn't a ton out there about when you get a property that is a dud or has too high of maintenance costs. there's nothing wrong with eliminating those from your portfolio.
I sat on some properties too long that weren't working. You just keep hoping. Initially, you thought you could make a lot of money off of a particular property and that it'll turn around. But if it doesn't, you really do have to part ways because it takes your attention away from how you could be growing your wealth and your portfolio in other ways. If you're spending 80% of your time on one property, you can't focus on growth.
Click the link to listen to the full episode.
