It's been five months or so since I've joined this website and have been relatively absent from the forums, not because I decided REI wasn't for me, but rather because I have been busy doing deals! To set the stage, here's a brief recap of my life for the past couple of years:

Problem #1

After completing 8 grueling years of school three years ago, I am making a good living working as a pharmacist, however, at the end of the month, I couldn't figure out why my bank account wasn't growing proportionately to the high-income salary I was receiving. Work is beyond stressful, I have guns pointed at my head from people trying to rob my safe, and nothing but disrespect from my patients--all to earn a high income salary and get three weeks of vacation per year. I am less than thrilled I invested eight years of my life dedicated to earning a doctoral degree to spend the next 30 years in a career I detest. At this point, I was thinking I should utilize my US Merchant Marine Officer license from the Coast Guard and re-open my charter fishing business or drive cargo ships up and down the Mississippi River. What now?

Solution #1

I went onto ancestry.com and attempted to find any rich relatives I didn't know existed that were up there in age. Just kidding. But really, I was near this point. Instead, I created an elaborate budget in Excel to figure out where my income was going. 

Problem #2

I discovered money pits such as cable, vacations, dates, eating out, etc. And one of the biggest expenses? RENT! I was paying close to $1200/month living on the Lower East Side of Milwaukee. While I love the area, it made me sick throwing this cash out the window every month so I thought about saving money to invest in a house so I'd at least start accumulating some equity. 

Solution #2

I made some radical changes in my life to start saving money for a house. I recorded (and still do) each and every transaction I make each month to make sure I am sticking to my budget. It's almost like a game to see how much money I can save each month. At this point, I'm no longer living like a rockstar, but my cash is accumulating with the intent to buy a house out in the suburbs and start investing in stocks while continuing to contribute the max to my work-sponsored 401K. It seems like that's what everyone else does, so I should probably do that, right?

Problem #3

I start reading about why houses are bad investments while at the same time I see my 401K losing money. Then I hear rumors about a looming recession approaching (late 2015). Should I really be investing this hard-earned money into a house and stocks?

Solution #3

It's late February of 2016, and I start browsing the internet learning about self-storage due to my friend's boss doing very well in the business. And then with one magic click of the mouse later, I was lead to the BiggerPockets forums which has completely changed my life. After learning medicine for most of my life, I dread going home to read medical journals to stay up to date, and it seems like my brain retains 0.1% of the content I read, on a good day. However, after discovering this website, my brain has literally been a sponge for REI knowledge. I studied the forums, listened to podcasts, watched the webinars, and read books before and after work for several months (and still do) before feeling somewhat ready to jump into this career.

I have a Type A personality, like most people in the medical field so I knew I would need the perfect opportunity to present itself in order to act on a deal, after meticulously analyzing the crap out of it to make sure it was absolutely perfect. Knowing this about myself, I did not want to get stuck in the analysis paralysis trap that would be my ultimate demise for not getting started in this field. I knew I would never feel completely ready; therefore, I started networking on here as well as my local REIA, and I interviewed real estate agents, CPAs, lenders, and attorneys to start my team.

I've met some incredible people already along the way. I want to give a shout-out to @Svetlana Foley for meeting with me and presenting an incredible deal my way. It didn't work out due to some zoning issues I didn't want to deal with, but she caters to investors in the Milwaukee suburbs, and I highly recommend her. The agent that has catapulted me into this field is @Carole Wehner, aka the "Duplex Queen." She is an investor herself and specializes in residential real estate investing on the East Side of Milwaukee and owns her own real estate company. She just joined BiggerPockets, but she also has a website, buysellduplex.com where you can reach her if you are seriously interested in investing in this area. She has been instrumental in furthering my education in REI by giving me the real-life, hands-on experience that accompanies this field that the books just can't teach you. Anyways, let's get to the deals already!

Deal #1 - House-Hacking

Two houses on the same lot, right off of Brady St. There was a duplex and a small, single-family 3 bed/1 bath on a 5000 sq ft lot. Asking price was $350K, but I got it for $335K with rents totaling $2400/month. This wasn't a steal by any means, but my tenants are paying my mortgage, it's a tax shelter, it's appreciating in a very desirable part of town (and rapidly growing), and I'm even cash-flowing ~$50 on top of all that with maintenance, insurance, and utilities figured in. I'm now saving an extra $1200/month that I used to pay in rent plus $50 cash flow (pre-tax)! The best part is, I only had to move about 6 blocks away from the area I never wanted to leave! For those of you that aren't familiar with the area, the Lower East Side is an A-/B+ area - one of the most desirable parts of Milwaukee as you could probably tell by the sales price of the property. This proves you don't have to live in a C+ area to house-hack! Once I move out of my unit in the future, the rents will easily total over $3600/month, exceeding the 1% rule, cash-flowing $1260/month, yielding a 60% pre-tax cash on cash return! (See below for financing)

I financed this deal through Great Midwest Bank, which I also highly recommend. My loan officer, Mark Scaduto, was another integral team member to the start of this new side-career. I can't say enough great things about him. GMB is a portfolio lender in Bayside, WI, but they also do conventional financing as well. I didn't want to tie up all my cash, so I elected to only put down 5% on a 5 year ARM at 3.5% amortized over 30 years. Luckily I have excellent credit so the private mortgage insurance (PMI) is only $125/month and will go away once I have 20% equity in the property. Trying to find a PMI company to insure a 3-unit property with 5% down was a major headache, but with Mark's persistence, he found one. If he was unable to do so, I would have gone the FHA route.

Tenants - the upstairs tenant in the duplex after 15 years wanted to continue residing in her unit, even after I told her I'd have to increase rents $300 to at least be somewhere near market. She was paying $625 and I increased to $925 where I could easily get $1100; however, she is extremely pleasant to deal with, and I didn't want to jeopardize finding a new tenant and dealing with turnover costs. The guys in the single family were paying $1265/month, but were leaving at the end of August. Worried about finding tenants for the first time, I put an ad on craigslist as well as hotpads and to my surprise I had 15 responses the next day! After screening the applicants, I ended up renting the house to the first girls that toured the open house for $1475/month! Boom! After receiving checks on the 1st of every month and experiencing how this all works first-hand, I am a believer! I've got the itch now. 

Deal #2

A month later, Carole tells me the two houses across the street are going on the market. My first response - are you crazy?! I just bought two houses, there's no way I can buy two more! Then I found myself thinking about Rich Dad, Poor Dad. Instead of thinking "I can't fund another deal" I got into the mindset of "How can fund this deal." The houses were directly across the street next to each other, but on two different lots. They were being sold as one due to one water line being connected to both. Asking price was $295k for the pair. After walking through, I decided they weren't worth $295k. In fact, these are tear-down houses, and it's exactly what I plan to do with them. They are in the best part of town right behind Brady St. Long story short, I ended up buying them for $261k and financing them through GMB again as investment properties in a portfolio loan 5 year ARM at 4.125% over 25 years. I inherited tenants on these houses so I decided to keep rents the same since I plan a major project next April, but I'm still cash flowing $260/month between the two after all expenses, maintenance, etc. So there you have it, four houses in three months all on one block! I couldn't be happier, and I'm now a believer in the power of REI and the ways it can generate tremendous wealth. I'll continue to work as a pharmacist so I can look favorable to lenders, but I'll decrease my hours down the road to transition to part-time.

The Future

I mentioned the two houses across the street are tear-downs. I plan on building two triplexes or one 6-plex that will overlook Brady St. I've got an architect working on the drawings currently and meeting with the zoning committee due to the variances that will need to take place. My goal is not to own hundreds of single-family houses, but rather concentrate on small commercial multifamily that will give me good ROIs. I want to focus on specialized, boutique urban housing that is green, energy-efficient, modern, and smart. This is the inspiration behind my newly formed LLC, GreenCatch Properties. There is actually a demand for this in my market. The numbers are working well for this project with a projected 10+% capitalization rate, but now I will be on the search for a lender to do a construction loan and then refinance the six units hopefully pulling some equity out after completion and stabilization. I never thought I'd be looking at development and commercial real estate this early, but the race is on! I know I've got so much yet to learn, and I'm sure I'll make many mistakes along the road, but that's what makes us better investors, right? If anyone could recommend a bank for commercial real estate financing in the Milwaukee area as well as some good general contractors for this project, I would greatly appreciate it.

Thank you to my team as well as everyone from this community that helped jump-start me into this exciting new world I didn't know existed eight months ago!