Financial Freedom, If i can, you can too!

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Why do you feel you need to "work" for someone 9 to 5 or whatever it may be? Why is it that you take time out of your personal life and sit in a 4x6 cubicle, 5 days a week or may be even 7!

I had this discussion with some of my closest friends last night which motivated me to write this article. They all said they work to have a good lifestyle, a nice house to live in and they felt their 9 to 5 was a result of their years of investment in school.

I then asked them 1 question, if every job in the world paid you the same money, would you still do what you're doing right now? The answer was a unanimous NO.

Well then why don’t you just do what you love doing? They looked at me as if I were really lost and confused. They said how will I get the money to live my life as I do now. I like to dance but I won't make a 100K per year dancing. Some said, there is no way you can do what you are passionate about and still live the same lifestyle we have right now. My argument was you don’t have to work for money, make the money work for you. The immediate response was, well yeah you can invest and stuff, like in Real Estate or stocks but that doesn’t always work. It shocked me that instead of saying "I don’t know about investing and I want to learn about it" they said "Real Estate won't work since the mortgages are crazy high so profits are not possible and the Stock Market is just a gamble".

Many of us live with assumptions that block our capability to think and question things around us. I was sad that the people I care about so much are lost in an illusion that their 9 to 5 is taking care of them. Most of us are in that illusion. So this is my story from being lost in an illusion to being financially free in less than 4 years.

I did my masters in Computer Engineering, a carefully selected field so I safely land in some job. I did my summer internship and landed in a full time job after my school. Met the love of my life and we got married a year after we met. It wasn’t long after that we started talking about our finances and investments. To be honest, after we realized how much money we spent on our wedding, the bells in our heads rang and we started thinking of investments thereon.

Saving money is like keeping the seed of a plant in your pocket and just walking with it everywhere. Investing however, is planting it after you have studied the soil, the climate and everything else that will make this plant thrive.

We collected and read many books, eBooks, audiobooks and podcasts and began our research on every option of investment available. Everything seemed new to us, the taxes, people, rules, everything. But now I think it doesn’t matter where you are from and where you plan on investing, if you set your mind and invest your time in the research, you will be able to crack it.

After weeks of studying how investments work, I wouldn’t say we got a 100% clear idea but we were fairly confident that Real Estate was the way to go. We initially had an inclination towards real estate investments but we had our own doubts. So now that our path was clear to us, we started deep diving in Real Estate investment.

We spent almost 1 year in our research which included Reading books, article and everything available online, meeting Real Estate Investment groups in the area and also outside, CPAs, mentors etc. We would drive 2 hours to meet with different groups of investors to talk, get ideas and share. Like us, there were many who were new to investing and wanted to learn. We also listened to a lot of podcasts while driving. I would set up appointments with Realtors to talk about our plans and learn about market and properties. In 2014, we were ready to get our feet wet. The real house hunt started.

Stepping back, what did we look for while searching for a "good" property? We made a simple calculator. Our model was Buy, Hold and Rent. If the purchase price was right which depended on our savings and if it was in a decent enough location to be rented, such that after paying the mortgage and other expenses we would still make some money, then that would be the right house.

I spoke to 12-13 realtors just to find out who understands and works with investors. Now you should understand that a personal home buyer and investor think very different. For an investor, a house holds no emotional value, it is just a bunch of frames, drywall and roof, building and fixing which is not rocket science. A home buyer who is looking for something to live in, looks at it from a different eye, which you might already know and I won't get into that. We found 1 property, made an appointment to view it, played with the numbers in our calculator, it said "great". We realized we needed to get pre-approved to put an offer, so by the recommendation of our realtor got that sorted out and then we put a full price offer. The house got over bid and since this was our very first try, I got a little frustrated. I now know how important that first failure was. I started looking at the market carefully for more opportunities with a deeper focus.

We found another one. A townhouse. Made the viewing appointment, did the numbers, looked great, had a pre-approval letter, made a full price offer, got accepted. Good. Next step, scheduled an inspection quickly, report was okay with minor but not deal breaker kind of repairs. Looked great, ordered the appraisal, got all clear and closed on time. Phew! Trust me I have skipped a LOT of details. Those details are full of ups and downs but I will keep it to the point.

Now I wanted to get it rented. I realized getting it furnished at least a little would get it rented quicker. So we got some furniture for the basics and it was rented in no time. Now renting it as a house for a family would have got $1000 or $1200 in rent, so we decided to rent it room by room to interns and made $1500 in rent. Our profit after counting in all the expenses was only $350 but it was something. The rent checks came in every month and it made us realize "yes, it is possible to be on a vacation and still get paid". We didn’t want to stop there and so we bought another one 2 months later. Followed the same steps and made a $800 profit with it per month. It was more! Good.

This was a very simple buy, hold and rent technique which can bring in only so much in passive rental income. The real deal is multi-family - 2 units or more. The market had none. All the multi units on the market were priced very high but there was one which was in such a bad shape that no one would buy it. It was a duplex in a street close to downtown which scared every buyer who came in but was in a decent neighborhood, not "A class", however. The place did need a LOT of repairs but apart from that it was a drug house. The neighbors had terrible complaints about the previous residents and dozens of cars that came by to visit them. So yes, that’s the reason it was on market for so long and was cheap. If you want to be an investor in this field, this is the REAL deal. My husband, more than me, could see the potential and decided to buy it on hard money. You can google what that means. We closed on the property and started the re-hab just enough to get it rented. It was ready in 4 months. We interviewed handymen and contractors and found out that the first one will always take you for a ride if he knows you know nothing about fixing but he will tell you what needs to be done. That happened to us. We waited for him to leave and spoke to the next one with more information and confidence. Then spoke to the 3rd, 4th and 5th with more and more confidence. You should always appear to them as if you really know what needs to be fixed and what doesn’t. You need to first learn some things yourself and tell them clearly I need this patch fixed and this plumbing repaired and no I don’t want to fix the gutters yet. The house was ready for renting. The place got rented within a week and now we made a profit of $1700. Not bad at all. This was Buy, Fix, Hold and Rent. We now had a total of $2800 coming in every month as passive income doing nothing at all. We also had our 9 to 5 going on the side which of course gave us the capability of investing in the very first place.

It was clear that multifamily, residential or commercial in a decent enough neighborhood was the way to go. From townhouses to a duplex, we were now looking for another multifamily. We followed some guidelines about a property:

  1. Should need some repairs i.e should be cheaper than others in a ready to move in condition.
  2. Should not be in "A class" but decent enough neighborhood, since there are many apartments which "A class" people might prefer, adding to the competition.
  3. Furnishing a little will get you better rents, quicker.
  4. Should be multi-unit.

Our search for the next one was on. Weeks and months passed by, nothing. After 1 year we found another place. It was a broken commercial multi unit property which kept going on and off the market. It would go pending, fail inspections in every way and then come back on. The realtors called it a ghost house, scary house, drug place and what not. Viola! I remember entering the units and I asked my husband why! ? I had so many doubts and was very close to saying no. But my husband on the other hand had big smile on his face. Thank God, at least one of us could see the potential. This is how the investors are. They can see the potential and do the numbers in their head. So we bought it. The rehab began and it took us 1 year! Yes, this was a long one. I would be able to write a book about the rehab but may be later. We learnt so much in this one year, no university course could teach us this. After it was ready, it got rented. It now brings us close to $5.5k per month.

With close to $8k coming in every month we realized how important the decision was to start studying and researching about opportunities we have in front of us. If only you get out of the comfort zone. After all we started with $350 profit.

We now have an apartment complex in a University town getting ready for the students to start renting.

Our goal now is to spread the word and tell people that if you want to be financially free, it is not as hard as you imagine. My husband and I have missed birthday dinners and parties with friends for 4 years to get financially free. We now feel that if we had gone to the parties and dinners with friends, we would be in the same spot we were in 4 years ago. If you put your mind to it and are okay taking the risk, you will be unstoppable because the biggest risk is not taking one!

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Great read. We have $600 of passive now and hoping to get to 10k a month while still working on building businesses. Way to go!

I have 13 EMPLOYEES that PAY ME to work FOR ME every month. They work for me, pay my property taxes, pay my property insurance, pay for the upkeep of my properties, and pay me to watch over them:) I don't pay them one dime in social security, medicare, etc. , NADA,  They work for me 24/7/365. If I ever fire them, I don't have to pay any unemployment taxes on them. WHY WHY WHY would I want a J-O-B?

John Thedford, Real Estate Agent in FL (#BK3098153)

Wow... great story pragya. Truly inspiring, thanks for sharing.

“If you do what most people are not doing today, you can do what they can’t ,tomorrow “.

Amazing story Pragya! You are absolutely correct, the biggest risk is not taking one! Great motivation.

Wow! Thank you for this story. Enjoyed the read so much information and empowering. I just got pre approved and of course researching by reading books and podcast. My desire is multi units too. I’m in the process of seeking a realtor who deals with investors because I know they would have a lot of information and knowledge. So congrats to you and your husband for stepping out on faith and making it happen. I’m on my way and well do what it takes to make it my goals come to fruition.

Awesome story keep up the great work!

Great story @Pragya Singh .  Love your mindset and determination.  You should consider being a podcast guest at some point, as I'm sure others would benefit from hearing about your path to financial freedom.

Awesome journey and write up!! Thanks for sharing! We currently own three rentals and are cashflowing $1900 total each month from them, but we are going to own 1000+ units within ten years. We also understand that multifamily is where it's at.

Thanks again!!

great read @Pragya Singh .. very inspiring specially when it's getting harder and harder to find deals in today's market. Do you focus only in local properties up there in Oregon or have expanded to out of state for the MF in  university town? Wish you the best of success in years ahead :)

Thanks @Hardik Patel . We did expand out of state due to the market saturation in the area. Managing those are very different compared to the local ones. But it definitely brings in new learning and opportunities. 

Great! would like to know more about how you are managing remotely (while working) and which markets look attractive in April 2018 and near future according to your insights. I second earlier suggestions about a podcast! :) well-deserved... Thank you!

Great post. Really enjoyed the read. My wife and I have similar success. Out of curiosity Are each of the monthly numbers provided a net after monthly/annual expenses (mortgages, maintenance, taxes, insurance, etc.) If not, what would be your monthly gross vs net not including the new college building?

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