A Call for Inspiration: Share Your Overall Success

45 Replies

Hi BP. I find that the success of others inspires me and sheds light on what's possible. I have my why for wanting to create wealth... giving, family, travel, etc. and I assume others have their why as well.

I would like for people to share their overall success stories. What I mean by that is, if you're comfortable with it, share a broad range of your yearly income (whatever range you're comfortable sharing). Share that you're able to take a one week vacation once a month or four times a year or whatever it might be. Share that you were able to quit your 9 to 5, buy a lake house, whatever it may be. Inspire us with your success.

At times I have a hard time picturing the financial freedom. For example, if you own 10 SFHs cash flowing $200 a month, that's $2,000 a month which is $24,000 a year. That's cool. It's income, but it doesn't seem like travel the world, quit the rat race, financial freedom. Then there's the aspect of cashing out via refi and using that money to get your next property. I get re-investing profit to grow the business and getting that next property, but when do you cash out and pay for that vacation or pay yourself? Speaking of paying yourself, if you have LLCs that hold properties, how do you pay yourself through company? Dividends? Salary? Bonuses?

I hope there are examples shared that might help newbies and others get an idea of what's possible. I personally feel blessed with my job and am not looking to quit, at this point I'm looking to supplement, but I like exploring the possibilities of REI. Who knows, maybe someday the supplemental outweighs the primary.

Updated about 3 years ago

Edit: Nevermind on the LLC part. I realized that's another topic. Let's focus on the success.

@Michael B. I entered 2017 with ZERO experience as an investor. I met my partner Zerik and we both determined quickly that we needed each other to really grow. 

In 2017 we bought 5 homes and completed 3 rehabs and sells. The other 2 are still underway. 

I went from a 100% startup consultant to 50/50 to 100% real estate investor in 12 months. 

I couldn't be happier!

Onwards,

sjw

@Michael B. I'd for sure say the goal is NOT 24k/year. But it's important to note as many have said here previously it just takes a long time. Get rich quick is the exception not the rule. For the longest time I had a goal of $12,000/month free cash flow from the properties. I bought a lot of stuff in 2004-2007 and as you can imagine I was not making 12k/month during those years or the ones following it. But I kept grinding though and bought more stuff in 2007-2010, with difficulty. Then all of the sudden one day it just all started to pay out. And in 2011 and 2012 it started to get easier to buy. I believe the term around here is snow ball. And then of course once I reached my goal it was much easier to keep going, much easier to make and acquire more. And that I have. I've also taken on a lot of partners along the way who I have an obligation to look after things for awhile longer so not realistic for me to bow out at this time.

Moral of the story, think big in terms of numbers. But then have a realistic expectation that it's years of grinding. But potentially way less years and way more money than a 9-5.

Matt

I started 2017 in the education phase and ended it with two rentals, and should get two more this year. You’re right that 12 homes and 24k a year isn’t earth shattering, but my goal of 10 properties by 27 and 20 properties by 30, could really move the needle.

If that happens, conservatively I’d be collecting 18k a month in gross rent and probably net cash flow 20-25 percent of that. Then as I scaled even further with multifamily I
Could easily have 50 properties or 50 units by 35. At that point it’d be quite earth shattering.

This all sounds like pie in the sky but I have a plan to reach these goals and so far I am on track. I could retire at 35 if I wanted to, but I don’t plan to.

I own 8 units of Multifamily currently. A house hack I live in and a 6 unit apartment building.

I started out with the house hack and 2016 and was able to save enough for a down payment on the 6 unit in less than a year because of cutting out my living expense!

Hit 50 yrs old a few years back and did a "review of the first 50".  Realized I wanted to make a bigger impact on society than I was currently accomplishing and simultaneously leave a legacy for my kids and grandkids. Looked around for ways to accomplish my goals faster and settled on MF Investing. Decided I wanted to build a real estate company to become the "Tom's Shoes" of commercial real estate. Since that time I have not looked back.  Just closed on a 125 unit townhome deal in Lexington, KY 4 weeks ago. Here is my "Big Why"...

From a young age, my faith was a huge part of my life. As a teenager in the border town of El Paso, Texas, I went on more than one mission trip into Mexico to work with kids in orphanages. I was greatly affected by what I saw. I also spent summers working with my uncle at a large church camp he ran in the mountains of New Mexico. You could say that service was part of my life from an early age. The year was 1997. My wife, two kids, and I had a great life by most standards. We had a successful practice, a nice home, and were active in our local church. But we wanted more. We considered adopting a child, then after lots of soul-searching and prayer, we decided to pursue the idea.

Through an amazing set of circumstances, we were made aware of a family of 7 orphans that the Russian government was going to separate. They planned to send them to three different countries, never to see each other again. While we knew that we could never adopt that many kids ourselves, we had a desire to help find a home for them. As we looked at the pictures of the seven kids, my wife felt called to take on the task of finding a family that would keep the kids together. As we set out on our mission, we targeted all our well-to-do friends, as we knew it would take someone with a very good income to support a crew like that. I can remember laughing to myself and thinking, who would be crazy enough and have a large enough home to adopt seven kids? As the months went by, we had no luck finding a family and time was running out. The Russian government was close to separating the kids and sending them abroad. With no apparent takers in sight, and the split-up of the siblings imminent, the idea of adopting them ourselves crept in. We knew there would be major financial sacrifices and challenges, but the thought of someone separating our two biological children (like these kids were about to experience) was more than enough motivation for us. Having a Savior who loved us enough to die for our sins, when we had done nothing to deserve his love, compelled us to do more than just join a $35 a month orphan-support program (those are great though and we support one too).

On August 12, 1999, we arrived back on U.S. soil having just completed the single largest adoption at one time in U.S./Russian history (at least that’s what the embassy told us). We arrived at the Raleigh-Durham airport with three boys (ages 14, 6 & 6) and four girls (ages 13, 9, 7, & 5) who spoke a total of 12 words of English amongst them. We had no idea of the great blessings and struggles that lay ahead. As we raised our crew of nine young adults, we learned of the challenges that many Eastern European orphaned children face. We saw the first-hand effects of rampant alcohol abuse that plagues Russian society, as well as Fetal Alcohol Syndrome, Reactive Attachment Disorder, and learning disabilities in our kids. We saw the psychological damage caused by their family being fractured at an early age and continue to see them struggle even today. Little did we know how this would open our hearts to the plight of orphans and human trafficking victims worldwide.

The most disadvantaged in our societies, the ones who can’t fight for themselves, often live in the shadows. Their great needs go unmet and their stories are seldom told. These kids and young adults need someone to fight for them. They need champions to take up their cause and go to battle, fighting poverty, fighting the sex industry, and most importantly fighting to save their lives. I met one of my Wellings Capital partners, Paul, on a business mission trip to New Zealand. He was an entrepreneur much like me and we immediately hit it off. I admired Paul because he had a desire to help the needy and spread God’s love. We continued to spend many years brainstorming on business ventures that would help investors, while spinning off lots of income we could use to help fund our humanitarian efforts. It is our goal to be the Tom’s Shoes, or Mercy Waters, of the multifamily world. We hope to produce substantial returns for the investors we partner with and create great communities for our tenants to live in. Our desire is to generate profits from which to funnel hundreds of thousands, if not millions of dollars, into the education, care, and protection of children and young adults worldwide, to fighting human trafficking and the care of orphans worldwide. We believe we can leave a legacy that our children and grandchildren will be proud of and MF investing will make it possible!

Cheers!

Introduction

The following submission is based on several factors contributing to my living a “Life of Riley” of sorts for the past 15 years. I don’t consider myself financially free just yet. I have, however, taken many mini-retirements since 2002 thanks to the direct and indirect benefits of real estate. In some time periods, I would do some investing. In other time periods, I would take a break from the real world (working, investing) and just go out and play. Disclaimer: I am a native Austinite and frequently employ the “slacker” approach to investing. I sometimes do the least amount of work needed so that I can take the rest of the year off.

During my career in software, I worked toward living on 70%, then 50%, then 33%, of my salary. That way I could lower the requirements of my passive income before quitting the JOB way of life. I've been debt-free since 2010 (aside for a 1yr student loan from 2014, now paid off), and focused more on travel and play than I have on building passive income. I also stopped pursuing full-time work since 2011 and did short term contracts so that I could travel more frequently. That sort of strategy requires years of good financial habits which I built through my involvement in real estate.

Part 1: The Three Major Factors Contributing To My Lifestyle

Factor 1: Exploiting “game mechanics” of the real estate game.

  1. Cash-out refinances on properties where tenants are making the payments on my behalf
  2. Income from Notes that I either purchased or originated
  3. Income from investment properties

Factor 2: Exploiting “game mechanics” of the finance game:

  1. Unemployment strategies: get laid off or fired instead of quitting
  2. FAFSA and Pell Grants: plan ahead and position myself to qualify for financial aid when returning to college in 2014. Borrow more than I need so that I have a cushion of cash to live off of while job-hunting or deal-hunting
  3. Tax write-offs for travel and expenses related to volunteer work (domestic and international)

Factor 3: Budgeting, Knowledge, Experience, and Connections

  1. Developing the habit of living within my means, and investing the rest.
  2. Knowing that I can jump in and out of the RE game whenever I want.
  3. Having the confidence and resources (not just financial) to take many different risks (not just real estate) to live an interesting and sometimes-carefree life of freedom while I pursue my passions.
  4. Knowing that I don’t need money or credit to make a great living RE, so long as I keep my integrity and reputation. I can always raise money if I have a great deal tied up.

Part 2: Experiences

2002-2004 (Seattle, WA): I took a 1-week investor retreat to Hawaii, and spent a week in Australia. My most vivid memories are walking along the Gold Coast and body surfing in Sydney.

2005-2008 (Seattle, WA): I spent part of my time doing RE deals, and the rest of my time pursuing hobbies and interests such as paragliding, programming projects, and some travel.

2011-2012 (Delaware, New York, Connecticut): I did lots of back-road cycling, 8 Broadway shows, 1 cruise to Bermuda, 1 18-day self-guided cycling tour through France, and some ballroom dance lessons. I also spent my spare time teaching myself HTML5 game development.

2013-2014 (Austin, TX): I returned to college to finish my Computer Science degree. I joined the UT Longhorn pep band as an alto sax player. I got to play at the men’s and women’s basketball games, and the women’s volleyball games throughout the season, including the NCAA Tournament for women’s basketball and volleyball games. I got to see a tournament game inside the impressive Nebraska volleyball stadium!

2016 (S.Africa): In late 2016 my girlfriend and I spent 5 months taking a road trip from Texas to Maine and back. During this time we spent 6 weeks in South Africa: 4 weeks as a wildlife conservation volunteer at Kariega Game Reserve, and 2 weeks in and around Cape Town. I proposed to my GF (now my fiancee) at the exclusive lagoon that only volunteers have access to. This is the experience that acted as a catalyst for me to get back into the RE game: build passive income so I can travel the world, volunteer, and do as I please.

2017: In Fall 2017 we took a 45-day road trip to see the eclipse and to visit many western National Parks. This includes the Badlands, Devil’s Tower, Medicine Wheel and Bighorn National Forest, Mt Rushmore, Deadwood, Yellowstone, Grand Tetons, Craters of the Moon, Petrified Forest, Taos/Santa Fe/Albuquerque, Sedona, Utah and Colorado, White Sands, and Roswell.

2018: Our goal is to return to South Africa by end of year and participate in the Living With Orphaned Rhinos volunteer program. We also want to start saving up for an RV so we can travel the USA in more comfort. That is this year’s WHY for getting into wholesaling.

Conclusion:

Note that I did not list any specific deals. My post is focused on the underlying mechanics, strategies, and rewards for taking action in real estate and in life. I have had many amazing experiences and I intend to have more.

@Michael B. I closed on my first investment property in April of 2017, I will now have 30-40ish units by next week. I am far from financially free but what I have found is a passion outside of the daily grind. Before 2017 I was spending money on frivalous things, I can now count on one hand what items I purchased for myself in 2017. In 2015 and 2016 I took numerous vacations, last year I took one vacation that was mostly free because of points and staying with a family member. It becomes about having a mindset of growth and scarcity at the same time. My goal at first was to not have to work, now the goal is to provide value. Best of luck and make sure to accomplish something every single day to help you towards your goal!

@Michael B. Reading about other's success is inspiring to me as well so I'll share my experience and hope that many others will jump in here to share theirs...I think this is my 1st post!  You inspired me to jump in and post:)

I remember sitting in the library reading Rich Dad Poor Dad while I was going to college and that book changed the trajectory of my life!  I got my Associates Degree in Business but then decided to get my real estate license back in 2001 and I've never looked back.  I'm a full time Realtor here in Phoenix Arizona and have been investing in real estate since 2004.  We bought 3 homes before the Crash and then didn't buy any other rentals until 2012.  I started flipping homes with a partner inn 2010 and saved all the money made from flipping and purchase rental properties.

Currently my wife and I have 13 residential rentals (Mix of Single Family, Townhomes, and Condos).  Current passive income is just over $6k per month with goal of $20k per month.  Average monthly cashflow per property is $467.68.  4 are paid off.  We also just closed on 2 multifamily buildings in Kansas (a 13 unit and 12 unit) with a partner and are in process of getting those rented out.  If we hit our projections that we have for year 1, it will be an additional $3,700 month cashflow getting us to half way to our goal of $20k!  Even without the multifamily units, once our properties are paid off, the cashflow jumps to $13k per month.  

I've been using the BRRRR strategy (Thanks to @Brandon Turner !)  I was doing the BRRRR strategy before I even had heard the term however I was doing the refinance part wrong.  I was refinancing before the 6 month seasoning requirement so I was out of pocket $50-60k per rental.  You can only buy so many rentals that way.  I've done the BRRRR strategy the right way now on the last 3 rentals and I've been able to buy these properties below market value, fix them up, and refinance them and got ALL my money back out!  So essentially I was able to acquire the last 3 rentals with zero money in the deal, they each have 25% equity, and each cashflow average $500 per month!  Question, how many rentals can you buy now when you're doing it this way?

I've listened to most of the Bigger Pockets episodes and listen to a lot of other real estate investing podcasts and audiobooks.  Immerse yourself in real estate investing and learn as much as you can!  Another excellent podcast episode that I highly recommend is - 5 Mindset Myths That Are Killing Your Wealth Potential - Jan 6th, 2017 (Passive Real Estate Investing Podcast with Marco Santarelli).

Sorry for the long comment.  I'm just excited for the future and look forward to achieving Financial Freedom from passive income!  Good luck on your investing journey.  Once you get going, it's addicting.  It's hard not to flip the rentals for a quick $30k- $50k vs deciding to keep it as a rental and make $500 month.  The $30-50k is very attractive and $500 doesn't sound too exciting but once you have 10 rentals, you're now at $5,000 per month coming in without you doing anything!  Focus on building long term wealth, you can thank me later:)

Originally posted by @Matt Hoyt :

@Michael B. I'd for sure say the goal is NOT 24k/year. But it's important to note as many have said here previously it just takes a long time. Get rich quick is the exception not the rule. For the longest time I had a goal of $12,000/month free cash flow from the properties. I bought a lot of stuff in 2004-2007 and as you can imagine I was not making 12k/month during those years or the ones following it. But I kept grinding though and bought more stuff in 2007-2010, with difficulty. Then all of the sudden one day it just all started to pay out. And in 2011 and 2012 it started to get easier to buy. I believe the term around here is snow ball. And then of course once I reached my goal it was much easier to keep going, much easier to make and acquire more. And that I have. I've also taken on a lot of partners along the way who I have an obligation to look after things for awhile longer so not realistic for me to bow out at this time.

Moral of the story, think big in terms of numbers. But then have a realistic expectation that it's years of grinding. But potentially way less years and way more money than a 9-5.

Matt

Matt, you mentioned your goal was 12K  a month, then later stated once I reached my goal... so you're cash flowing at least 12K a month now? If so, nice! Thanks for sharing some numbers that beginners can aspire to.

Originally posted by @Caleb Heimsoth :

I started 2017 in the education phase and ended it with two rentals, and should get two more this year. You’re right that 12 homes and 24k a year isn’t earth shattering, but my goal of 10 properties by 27 and 20 properties by 30, could really move the needle.

If that happens, conservatively I’d be collecting 18k a month in gross rent and probably net cash flow 20-25 percent of that. Then as I scaled even further with multifamily I
Could easily have 50 properties or 50 units by 35. At that point it’d be quite earth shattering.

This all sounds like pie in the sky but I have a plan to reach these goals and so far I am on track. I could retire at 35 if I wanted to, but I don’t plan to.

I wouldn't worry about pie in the sky, Caleb. I like to dream big. What's the saying? Something like shoot for the stars, maybe you'll land on the moon...

@Kyle Keller Thanks for jumping in, Kyle! 

I think Rich Dad Poor Dad inspired a lot of us. Thanks for your willingness to share some numbers. Stating that your current passive income is just over 6K a month is more inspiring than just stating our passive income is pretty good. I think beginners want to be inspired and I think what you're doing is inspiring. 

I would really like more information on your experience doing the BRRRR strategy the wrong way versus the right way. I think sometimes when we read information about it, some of the detail is missing. Such as what exactly it means to get ALL your money back out. Did you literally come away from the refi closing with a check that equaled or was greater than what you put in? Maybe that's a post for a different thread. Or, PM me!

No apologies for the long comment. Inspiration is what I want in this thread! And numbers! I'll thank you now, thanks!

@Brian Robbins That's just so awesome. Truly amazing what you did for that family which is now your family. That's a story I love reading. 

I would love a videotape of the conversation with you and your wife when you realized all the other options to save the kids weren't going to work. "Honey, if we went to Costco and bought 4 bunk beds...."

@Michael B. Yes that was the goal and goal achieved awhile back. That was the number I felt my family and I could live comfortably on indefinitely and the only work I'd have to do was look after the portfolio. And I still feel that number would work. Obviously I've kept going and thing are bigger and more complicated now.

But the point to you is that it was 3 years of part time plus 14 years of full full time to get to 2018. And for a long time that goal was out there and seemed really far off, but then all of the sudden at some point it just all came to together. I think goal was achieved 2012.


The only common (and true) thread of all the guys out there who've made it is this: It takes hard hard work and usually quite a bit of time.

Matt

I remember my close minded acquaitances telling me why I was getting into the rental biz for just a $100/month profit.  Well there still working that 8 to 5 while I take numerous vacations a year and enjoy life.  You just need to get started and get out of the rat race.  It starts with one and there are endless possibilities.  Pic is from Chase account which are monthly rent deposits every single month.   I currently  have just over 30 SFRs and will be hitting 50 by the end of this year.  My net per month is around $12K.

Originally posted by @Rocky V. :

I remember my close minded acquaitances telling me why I was getting into the rental biz for just a $100/month profit.  Well there still working that 8 to 5 while I take numerous vacations a year and enjoy life.  You just need to get started and get out of the rat race.  It starts with one and there are endless possibilities.  Pic is from Chase account which are monthly rent deposits every single month.   I currently  have just over 30 SFRs and will be hitting 50 by the end of this year.  My net per month is around $12K.

 Wow, that's nice Rocky! Interesting you're doing it with a lot of SFRs. At this point, I feel like that's the area where I would like to focus.

@Caleb Heimsoth I've been in the biz since 2000 but started as a side gig.  Maybe rehabbing one a year and picking up one or two rentals.  Since 2010 I really started focusing more on real estate and that was when I saw by bank balances go crazy.  If you focus it is not hard to acquire at least 3-5 a year.  Business relationships are key and cash reserves are a must.  

@Rocky V.  that’s kind of how I’m starting out.  I’m going to be doing 2-3 per year and eventually want to get to 5-6.  At that point I don’t think it would take long to accumulate a large portfolio.  I’m in my early 20s, so I’ve got a long time horizon 

Profit in real estate comes from cash flow, principal reduction, and appreciation...not just cash flow.  Some investors have properties with $0 cash flow that are very profitable.

Many investors force appreciation through rehab or improving NOI in commercial properties. It would take many many years of cash flow at $200 per door to achieve the same profit these investors get in one year of forced appreciation.

Originally posted by @Mike Dymski :

Profit in real estate comes from cash flow, principal reduction, and appreciation...not just cash flow.  Some investors have properties with $0 cash flow that are very profitable.

Many investors force appreciation through rehab or improving NOI in commercial properties. It would take many many years of cash flow at $200 per door to achieve the same profit these investors get in one year of forced appreciation.

Thanks Mike. If you care to elaborate on the first paragraph that might be cool. Also, if you’re willing to share your success in terms of free time, cash flow, etc. that might be interesting.

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