Following Trump's American Dream!!!

Following Trump's American Dream!!!

Rental Property Investor · San Diego, CA · Member since 2014 · 1k+ posts · 2k+ votes

I just left this message below in reply to a forum post recently.  I thought I would share it with all here to document my path and to inspire others to follow a similar path and stay away from late night guru garbage, touting something for nothing, instant gratification, diseased mind thinking.  Lately, I have been receiving phone calls and messages from members that need to get their financial house in order, before investing in Real Estate.  

Donald Trump did it with 1 million seed money and I used my own money. I only used $300,000 (refinancing personal residence, savings, IRA money, stocks etc...) of my own money to build up a modest 2 million in equity and soon to be nearly 6 million in Real Estate after ONLY 5 short years of real estate investing. Here is my story below. I am no Trump. However, I only make combined family W2 earnings of $80,000.00 at my 2 teaching jobs and my wife working part time as a special Ed assistant. If a lowly paid teacher can achieve sooooooooo much and be financially free after such a short time, then anybody can!! Here we go!! This is my Easter gift to you. Read it and live it. I did and will continue to do so.

My path was to start with single family condos in San Diego that I purchased in 2011 and 2012 for less than 1/2 of what they were selling for during the peak. Dramatic appreciation happened from 2013 to 2015 and we started 1031 exchanging those condos for 8, 10, 12, and a 15 unit complex in Northeast Ohio. I basically traded in 4 condos cash flowing at about $6,000.00 each per year on 30 year loans for $15-$20,000 cash flow for each Apartment complex. The power of the 1031 exchange is amazing!!! I read Multifamily Millions by David Lindahl, listened religiously to Lifestyles Unlimited Inc. (LUI) podcasts on TUNEIN RADIO for 2 years and attended LUI’s 2 day seminar in Houston, Texas. On Day 2 of that seminar, I knew that eventually I will have Three or four 300-400 unit Apartment complexes. Right now our Tax deferred cash flow sits at $120,000 per year and in 10 years time, I will be sitting at $1,000,000.00 tax deferred cash flow coming in yearly. I still have 4 pricey rental condos here in San Diego that I expect to sell and 1031 exchange this summer when the current rental leases expire.

Check this out!!  I am currently fully executing my first purchase agreement for an Equity Partnership with friends. We are purchasing a 21 unit and my total doors will now be up to 78 front doors, with the 8 single family we also own in the same State as our Apartment complexes. In the equity partnership, I will be putting in 10% of the down payment and receive 20% of the cash flow and 20% of the equity for my connections, running the entire thing as the managing partner. The investors will be contributing 90% of the down payment. 

If a lowly paid teacher earning a combined family income, before taxes of $80,000 can do this. Anyone can!!  If you change the way you look at things, the things you look at, change right before your eyes!!  We are only limited by our self imposed limitations.  I once read and discovered the secret of a fantastic book called Think and Grow Rich and it was pivotal to my success so far and into the future.   Here is the secret discoverd by Napolian Hill back in the 1920's!!  

"Whatever the mind can conceive and believe it can achieve."  

I wonder if Donald Trump ever read this book.  I read it 6 times and am reading it for the 7th time now!

Swanny

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Real Estate Broker · North Richland Hills, TX · Member since 2013 · 1k+ posts · 607 votes
10y

Believe me, I've heard the LU pitch on ripping the bandaid off your 401K and IRA and paying the taxes many times. I don't like that approach, at least not for me. Why?

1) First off, 401K's and IRA's are investment vehicles, not investments. Roth accounts especially have tax advantages that after-tax real estate can't touch. Every investment in my Roth accounts will be tax-free for life!

2) I have enough in my retirement accounts that I'd have to take about a 50% hit on taxes and penalties to liquidate. That's not acceptable to me. Instead, I set up a Solo 401K for my retirement funds, ex. for a relatively small portion of Roth IRA funds which can't be rolled into Solo 401K's per IRS regs. Both my Solo 401K and Roth IRA accounts are self-directed. My strategy is to convert a portion of my trad. Solo 401K funds to Roth every year according to my ability to pay the taxes on such conversions. I haven't had any money in the markets for over a year now - my retirement funds consist solely of passive MF interests, a seller-financed note, and private lending.

3) Retirement accounts offer great protection from creditors and judgments, at least here in Texas.    Liquidating per LU recommendations strips those protections away, creating a lot more exposure (and incentive for others to sue).   Having been recently threatened w/ a (admittedly frivolous) lawsuit, I sleep better at night knowing this nest-egg is judgment-proof.

My passive income is probably lighter than yours, as I've consciously invested primarily in value and hybrid, as opposed to yield, plays.    I'm self-employed as a full-time investor/realtor, and make enough to support myself doing that while continuing to build my passive streams of income.   I'm all set for retirement, just have to supplement w/ some active income for now!

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  • San Diego, CA · Member since 2016 · 2 posts · 3 votes
    10y

    Swanny, thank you for the inspiration and motivation. I am new to investing and to San Diego, so I know I have a lot of obstacles and a lot to learn. But stories like these remind me that it is very possible and keeps me motivated. I am heading to Barnes & Noble now to pick up that book! If you would be so kind; I would like to know what beliefs do you hold that you think has not only led to your success, but has set you apart from the countless who have failed at such endeavors. 

  • Rental Property Investor · San Diego, CA · Member since 2014 · 1k+ posts · 2k+ votes
    10y

    Hi @William Haldeman,

    This may help others to follow my lead.  First I read the richest man in Babelon, then in this order, I read Think and grow rich, rich dad poor dad and all his books, the millionaire next door, the real estate millionaire, buy it rent it get rich, multifamily millions, , emerging markets by the same author, David Lindahl, loopholes of real estate by Garrett Sutton, rich dad advisor, the 10X rule, The one thing, and anything else that I could get my hands on that spoke of passive tax deferred cash flow. STAY AWAY from anything that speaks of something for nothing, instantaneous gratification, diseased mentality. I listened to Lifestyles Unlimited Inc. LUI on tunein radio app for over 2 years.  It was an evolution.  Last, never take advice from someone that has less than you.  They will just bring you down!!

    Whatever the mind can conceive and believe it can achieve.  By Hill in the think and grow book.

    Pm me if you want to talk.

    Swanny

  • Lender · Huntington Beach, CA · Member since 2008 · 154 posts · 30 votes
    10y

    Can you comment more on The 10X Rule?  That's Grant Cardone's book, isn't it?

  • Rental Property Investor · San Diego, CA · Member since 2014 · 1k+ posts · 2k+ votes
    10y

    Hi@Catherine Coy,

    The Grant Cardone 10X Rule was instrumental in helping me to discover that my original goals of doubling my family W2 take home family income was way too low. My goals are now that in no more than 10 years time, I will have $1,000,000.00 in primarily tax deferred cash flow per year, $50,000,000.00 in total real estate and $16,000,000.00 in Net Worth.  This book, along with The One Thing is helping me to have a burning desire and belief, duty, obligation, and responsibility to focus on that one thing that I can do, each and  every day to get me one step closer to my goal.

    Swanny

  • Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
    10y

    Great post again Swanny. I am curious still on your negative San Diego forecast 17-18.  I ask because UCLA's most recent builder setiment forecast is quite positive into 2018. Is this a gut feeling or is there some other reasons that you see these negatives coming? Anything above 50 below is positive on this most recent survey of builders. (Multis) As it is there is increasing positive setiment for SD. Are these largest builders going to be left holding the bag is your take for 2018ish?

  • Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
    10y

    I forgot the @Michael Swan for the above post. Just to follow up how does this survey compare to builders of multis in your new location? Or do you see any new multis being built as perhaps there might not be builder survey data available in some locations as there are so few or none to survey.

  • Rental Property Investor · San Diego, CA · Member since 2014 · 1k+ posts · 2k+ votes
    10y

    Hi again@Matt R.,

    Thank you for the kind words. I have lived in San Diego since 1978 and have seen these optimistic forecasts by reputable seemingly solid sources like you speak of. However, when my little 3br home in Mira Mesa is rapidly approaching and likely to exceed the peek value ever by this summer or at the latest next summer, that tells me that I need to get this equity out and move to other emerging markets that have high cash flow etc... When I here people getting loans, with 580 credit scores and government sponsored 3% down loans, even a 10% market correction will cause these 3% down loans to be underwater rather quickly. Inventory is soooooo low and when I sell and 1031 exchange my remaining 4 condos here in San Diego this summer, I will have made on my $30,000-34,000 down payments on each almost 600 percent return. Plus I will be acquiring much higher cash flow on that original seed money and with the apartment complex business model, not be dependent on comps. Apartment complex valuation is based on NOI. I am forcing appreciation by increasing the NOI.

    Do you really think wages will increase that much for a small 3br/1ba house that is approaching $500,000 in Mira Mesa,  will escalate that much higher.  It is only 1040 square feet?  My little abode will be worth a million some day?  That's what people told me before the last correction.  I didn't buy it.  Then, when the market corrected, I swooped in and bought 10 condos with 20-25% down leveraged debt and again people said I was crazy.  Why would I buy at that time in the market.  Values were soooo low and people said it was too risky.  Buy now? No way!! It wouldn't cash flow. I am done speculating anymore.  Everything is great with this price escalation, until it isn't.  When they start giving loans to people that can't save for a 20% down payment, I say run for the hills and get your equity out and find an emerging buyers market, instead of a low inventory ridden, hyper inflated  sellers phase 2 seller's market.  Why buy into that market now.  These rules must be followed. 1. It can't lose money. 2. It must cash flow.  I can't see that now, here in San Diego.

    Swanny

  • Rental Property Investor · San Diego, CA · Member since 2014 · 1k+ posts · 2k+ votes
    10y

    Plus @Matt R.

    In the area I am investing, there is new commercial development (urban feel in the suburbs with artisan trendy shopping etc), but not much new apartments being built.  The one I am purchasing presently (1.2 mil 21 unit that will cash flow about $40,000 on a $400,000 investment in a B class neighborhood, built in the '60's updated nicely) is right across the street from this new development.  The new development should be completed by 2017.  We are purchasing under $60,000 a unit.  Very excited about the potential!!

  • New to Real Estate · San Diego, CA · Member since 2013 · 49 posts · 6 votes
    10y

    Thanks again @Michael Swan for all the info you've shared here, and I look forward to hearing about your plan!

  • Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
    10y

    @Michael Swan Right on. I guess you are speaking of portfolio loans? Those alternative loan products are coming back into play as those lenders feel more confident maybe and or can go by different standards than the regular regulated banks...like how much assets one has vs credit scores. However when I try to get a loan today, it is no joke being self employed. That stuff is checked every way up down sideways and where did you live 25 years ago.

     I still don't get because the price is higher than before that means there is an issue with values. Prices are normally higher than 10 years ago for the history in Cali.  Last correction was not really a regular correction. I guess it could happen again or worse but those odds currently seem very very low at best. Many are predicting a return to normal. Normal for SD is 5% appreciation which is still awesome and equals every 10.4 years a double of values.  So that one at 300kish you are bailing, in 10 years is 600kish, not a million as that is crazy talk:) I see that as reasonable considering the timelines and adding in what is historically normal. 

    My mind is open to many different educated forecasts. I am just not feeling yours for San Diego.  No biggie:) Good luck with with selling those this summer....not that you will need much if any luck I think. 

  • Rental Property Investor · San Diego, CA · Member since 2014 · 1k+ posts · 2k+ votes
    10y

    Hi again @Matt R.

    My loans for apartment complexes are commercial loans.  The one exception is this new 21 unit we are purchasing.  That one the loan is held by an insurance company and ONLY 25% is recourse and the other 75% of the $871,000 is Non-Recourse.  Soooooo, the bigger the property the less risk!!

    This is Amazing!!  Feel free to send me a PM with your phone number of call me if you can find it on my profile.  I would love to talk to you more about this.

    I love this stuff!!!

    Swanny

  • Commercial Investor · Ocala FL · Member since 2012 · 74 posts · 21 votes
    10y

    Great Story @Michael Swan thanks for sharing your story is inspirational. Another thing your story includes that I love is the education and time you put in to have success. People can complain and blame all they want but it won't get them to there goals and the only one responsible for their success is themselves. We choose what our minds are thinking about whether we are happy or unhappy is a choice that we make daily we choose to know or not to know. The people that have success are not because of luck but because they are prepared and persistent. Keep killing it!

  • Rental Property Investor · San Diego, CA · Member since 2014 · 1k+ posts · 2k+ votes
    10y

    Hi @Denny Troncoso,

    You got it!!  Thank you for reading and contributing to the conversation.

    Swanny

  • Real Estate Agent · Post Falls, ID · Member since 2017 · 3 posts · 1 vote
    9y

    @Michael Swan Michael, you're such a boss!!! And an inspiration to us all. Keep up the good work and I have no doubt you'll get there.

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