Investor · Kansas City, MO · Member since 2017 · 791 posts · 1k+ votes
My first real estate investment was in 2010. I kept acquiring properties, sometimes using the BRRR strategy. I've been without a day job for 1.5 years looking for more deals and got a couple large portfolios in 2016. That hit our passive income goals but we had to recoup cash buffer.
It's officially official, we are free and neither of us have to work!
Looking forward to living life with my wife and both of us being able to do what we want when we want.
Celebrating with a well aged cigar from the year it all started. And some of my top shelf bourbon.
From someone who is just scratching the surface education, not even investing, congratulations to you and your wife's success both now and in the future. This was certainly an inspiration to read.
Austin, congrats on a great accomplishment. I'm your age and just coming to the realization and goal formulation that you did a decade ago. I have a high-paying W2 and made almost all the wrong decisions with that income for a number of years (expensive home, new cars every couple years, etc.). My wife and I have spent the last year or two simplifying our lives and getting our fiscal house back in order. In the process we've accumulated a low six-figure capital base to invest in RE.
First question: You stress that education and "knowing your stuff" has been key to your success. Care to share your REI reading list and other educational tools outside of Rich Dad Poor Dad?
Second Question: Because I have capital to invest I'm debating between starting with a 10+ unit turn-key professionally managed investment package (which, by default, would mean joining with a group of investors out of the gate) to get the cash flow rolling and using that cash flow to compound the acquisition of new SF and MF properties on my own. Or starting small and using my base capital to pick up those SF and MF properties first and working up to condo/apartment style deals. Thoughts?
Third Question: My local market is not investor-friendly by any means. Net population outflow, anemic job growth, high taxes, high(ish) cost of living, and on-market deals generally have pretty unattractive rent-to-price ratios...the works. Do you believe that there are deals in any market and that success can be had anywhere? Or would you stay away from red flag markets?
First question: Rich Dad Poor Dad is more about financial theory and reframing how to think about money. Some decent resources to start with: The ABC's of Real Estate Investing, Loopholes of Real Estate, and Investing in Duplexes, Triplexes, and Quads. Then there's a ton of other books that will bits and pieces of additional resources.
Second Question: I would recommend looking into all possible options. Project them out for 5-10+ years and compare. See how your decision today affects the decisions you'l be able to make at every point in the future too. Then decide what's best for you.
Third Question: Again I would say look into all options and compare.
All this comes back "knowing your stuff". When I say know your stuff I mean to truly know. You get to that point by doing lots of research and analyzing it all yourself. If you do that you truly know your stuff. You'll know why you prefer one type of investment or a particular area, and not just because someone else said do X instead of Y. Question everything.
@Michael Bishop - just answered it above as far as starting resources. Check out my bog too if you want. I'm trying to compile the theories I've learned over the years and sharing in depth there.
Congratulations ! I myself am on the journey to copy what you have done. The brrrr strategy has been working well for me since not having much capital was the biggest hurdle. Its been a little over 6 months since I decided to shoot for the stars and I'm closing on a triplex for unit numbers 6,7, and 8 this month. Your story is an inspiration. Thank you for sharing . Good luck on your adventure.
First of all, thank you so very much for providing the guidance, insights, and resources for us to learn from and execute on.
Congratulations on achieving one of the dreams of a lifetime! One of my good friends recently retired from her job of 11 years after both she and her husband had been building their portfolio for at least that long. It took a Tony Robbins event to get her to finally let go of security and enjoy the freedom, but still!
Anyhow, I have read this entire thread up to this point and was wondering if you'd mind elaborating on how you built and maintained your systems and people you brought in to handle different aspects of your business. You mentioned you work or worked only 1 hour per week in part thanks to a team of agents, the 2 property managers, the accountant and attorney. You also said that if you have a good property manager and good systems on your side, then it's pretty easy to do what you did.
Did you have written procedures for some of the tasks and responsibilities in your business? Did you ever use virtual assistants or freelancers for the roles outside of the accountant, agents, attorney, or property managers? Did you ever have a problem at some point where you wore too many hats?
First of all, thank you so very much for providing the guidance, insights, and resources for us to learn from and execute on.
Congratulations on achieving one of the dreams of a lifetime! One of my good friends recently retired from her job of 11 years after both she and her husband had been building their portfolio for at least that long. It took a Tony Robbins event to get her to finally let go of security and enjoy the freedom, but still!
Anyhow, I have read this entire thread up to this point and was wondering if you'd mind elaborating on how you built and maintained your systems and people you brought in to handle different aspects of your business. You mentioned you work or worked only 1 hour per week in part thanks to a team of agents, the 2 property managers, the accountant and attorney. You also said that if you have a good property manager and good systems on your side, then it's pretty easy to do what you did.
Did you have written procedures for some of the tasks and responsibilities in your business? Did you ever use virtual assistants or freelancers for the roles outside of the accountant, agents, attorney, or property managers? Did you ever have a problem at some point where you wore too many hats?
Thank you again.
Thanks Kristopher! My wife is actually choosing to work for a while longer and see some things through. She's one of five on the exec team at a company in LA and they have big things in the works. But she loves knowing she is only doing it because she wants to, not because she has to.
Yes, with the right people in place, it is easy. I legit do only spend 1 hour per week as far as keeping up with the 107 units. Ok, now to answer some questions:
WRITTEN PROCEDURES:
Kind of. As I built the property management company, yes I had a few written procedures. The written procedures and responsibilities were initially done for owners that were interested in having me manage for them. I only ever had one full time employee in that business. When I hired the full time guy I didn't add any additional "job title" type stuff. I pretty much just said here's what we do, how we do, and how often we do. Then had him shadow me and slowly start taking over the day to day.
VIRTUAL ASSISTANTS - no
TOO MANY HATS:
No, but I had a flexible day job (retail shop that had a day to day manager). Pretty much just had to get the stuff done by the time it needed to be done. I have definitely put in 70-80 hour work weeks. But even before hiring someone in the property management business, most of my weeks were an easy 40 hour week or less. And that included the property management business, running renovations, running my retail shop, and acquiring my own properties.
@Austin Fruechting Thanks for the post! Congratulations on your accomplishments! My wife and I are looking at different plans to get us to that point. We are about to make a major move to Dallas and hope to start anew there. We are in the process of selling our last rental here to make the move and can't wait to hit the ground running!
@Austin Fruechting congrats man! Couple questions (I apologize if you already answered these in the above comments). I think you mentioned you had a goal of 85k/yr in order to be financially free. I figured someone would only need 40 or 50 units to achieve that goal, especially if the units have great cashflow as you shared in a previous comment. I'm curious...did it actually take 107 units to achieve your goal or did you hit your goal much sooner? Is there a certain dollar amount per unit that you aim for, or does it depend on the deal? Last question: are your properties in decent areas, B, C+, etc? I'm also from KC and know the area pretty well. Thanks!
Congratulations on your success! I'd like to think once I achieve what you have achieved I will do the same. Bourbon and a Cigar. ;) Stories like these is extremely inspirational, and keeps me motivated to keep working towards this very same goal.
Best of luck to you and your wife! Enjoy the comfortable life.
@Austin Fruechting congrats man! Couple questions (I apologize if you already answered these in the above comments). I think you mentioned you had a goal of 85k/yr in order to be financially free. I figured someone would only need 40 or 50 units to achieve that goal, especially if the units have great cashflow as you shared in a previous comment. I'm curious...did it actually take 107 units to achieve your goal or did you hit your goal much sooner? Is there a certain dollar amount per unit that you aim for, or does it depend on the deal? Last question: are your properties in decent areas, B, C+, etc? I'm also from KC and know the area pretty well. Thanks!
Hey Aaron. Thanks for the congrats. I brought along a couple cash investors on some of the bigger deals that I did, so my equity ownership equates to 70 units of the 107. But my cash investors also get a preferred return, so based on cash flow it may be closer to as if i had 50-60. So our numbers aren't that far off, especially considering I do have some lower dollar rental units. All together if you looked dollars for purchase to dollars of cash flow, and adjusted for the preferred return that I give our numbers are probably very close. I would say the vast majority of our properties are in that C+ to B range. I have a few outliers that are A's, and some that are probably C, maybe even down to C- depending on who's judging.
@Austin Fruechting That makes sense. I can see why it's a good idea to bring some cash investors on...even though you're sharing a lot of the cashflow with them, you can grow faster.
Congrats!! Way to work hard and earn your way to freedom!
Since you have both SF and MF, perhaps you could comment on whether one provides better returns than the other for a buy and hold investor. Seems like MF should, because only one roof, etc., but does it play out?
How much do you set aside for Capex on SF versus MF?
@Cori Chekhovskiy - I generally got much better returns in MF than SF. There are some savings in the CapEx and some other expenses. But the biggest reason MF provided better returns than SF was the rent to purchase price was almost always better. With the SFH you have to compete against buyers that are wanting to owner occupy which makes it tougher to find the margins. All my SFH's have come from foreclosures or from a package deal from another investor.
I think you mentioned in your comments that your properties haven't really appreciated because you live in the Midwest. But if you started buying in 2010, you gotta admit that was a prime time to begin acquiring buy & holds. I have friends who purchased 4plexes at retail price in South KC in 2011-2012 and they've seen 30-40% appreciation just holding them. In South KC, rehabbers were buying their flips right off the MLS...they didn't have to search too much to find them during the housing crash. It's different now though...good deals on MLS can have 10+ offers (I can't speak for all of KC, only parts of South KC), so those who want to flip need to look off-market now.
What would your thoughts/advice be for someone just starting out in 2017? Even though you didn't buy for appreciation, you've probably seen some which creates a nice buffer of equity for you, no? People are saying we are nearing the top of the market, and there may be a correction coming...would that be a concern to you when buying rentals? Or do you not even care as long as the cashflow is positive?
@Austin Fruechting Congrats! Wait to turn the dream into a reality. It always cool to see people who set a goal and accomplish what they set out to do.
@Elizabeth Wilson - I do buy and hold. A lot just came from on market deals. A few from just making connections and they would send me opportunities (bankers, property managers)
My biggest deals came from doing a tax search (which I always do) on one property I had some interest in. I saw who the owner was and knew he owned a LOT of properties so selling one seemed like a red flag given the property. So I found someone to give me the seller's cell number and called him to ask why he was selling. He said over the next 3-5 years he was going to be unloading everything to retire and move to Florida. So we ended up doing a large package deal at a great price and it was a win-win.
Congratulations Austin! A lot of my purchases have come from semi-retired or nearly retired investors! I have to remember to always ask if they have other properties. Some sell off their high headache ones first, then wait for the others.
Great scaling over a short period! Also, this is a great reminder of what can be achieved with persistent time investment.