Hey everyone, and welcome to Passive Real Estate Investing. I’m Melissa Nash, your guest host jumping in for now. Let’s dive in.
I am so excited to have you here today and share your inspiring journey to the world of real estate investing. I know you’ve recently taken a pretty big step purchasing your first long-term rental property, and I’m really eager to hear all about it. So before we dive into your real estate journey, could you tell our listeners a little bit about yourself, maybe your background, what you do for a living, or anything else interesting that you’d like to share?
Sure. Yeah. Thanks Melissa. Thanks for having me. Yeah, I mean I let’s see. I got probably interested in investing in real estate maybe 10 years ago or so. At the time I was living in the Bay Area and you know, obviously very expensive there, so I didn’t have a lot of excess cash that I could invest in anything, honestly. But I, I’m trying to remember why real estate originally caught my eye. I mean, it was probably around the time that we purchased our first home me and my now ex-husband. And, you know, I just really thought the process was interesting and there’s something about just the tangibility of real estate that I really appreciated. I always kind of felt like the stock market was a little bit of a black box that I didn’t understand and, you know, maybe was never gonna have enough time to really get to a good research point with that, to feel really confident in that space.
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So I think maybe buying our first home was maybe one of the things that got me really interested in it. And so, yeah, at the time I took actually a Robert Kiyosaki seminar, which if you’ve heard of him, he does the Rich Dad Poor Dad stuff. And so I went to that one day and just got even more energized and kind of started down the path to get there. So a little more about myself. So I actually, right now I live up in the Lake Tahoe area. I have a 13-year-old daughter. And yeah, I work in marketing for a wine company, so that’s kind of a fun, fun career path on the side. <Laugh>.
Yeah, no kidding. That’s super fun. It’s interesting because, you know, I, I talk to a lot of investors and I feel like I don’t, Robert Kiyosaki has done so much to making real estate education feel more tangible to the everyday person, I think, because if you know it clearly that’s how you, you kind of mentioned you went to his seminar, but, you know, rich Dad, poor Dad, that book, it inspired me. It inspired almost every single investor that I talked to because I think it really changes your mindset because we, we think that, you know, we go through these traditional, I don’t know about you, but most investors I talk to and myself we’re taught this, you know, go to school, get good grades, get a good education, get a job, do the nine to five, and you know, here’s your retirement account and then you retire and you’re gonna be okay. And Rich Dad, poor Dad really flips that upside down and goes, well wait a minute. Is that the, the rich path? What did you kind of ex, what did you think when you were reading that or learning about that? And I mean, was that kind of like an eye-opening kind of brain, you know, moment for you where your brain just kind of exploded and went? Aha.
Yeah, I mean, I think it’s been, I guess what I would call kind of a slow awakening <laugh>. Yeah. I wouldn’t say that I’m like fully there yet, but yeah, I don’t know. I mean, it feels, especially like in American culture that we’re taught to kind of keep up with the Joneses and, you know, have a certain amount of outward success that we show. And that could be anything from a car to what neighborhood you live in to what purse you carry or, or things like that. And honestly, I think when I was first reading his book and then I ultimately went to his seminar and then now I have his board game and I play it with my daughter sometimes, but it kind of just changed my perspective that outward appearances obviously aren’t everything. And you know, the more I can be saving now and also finding ways to enjoy my life, right. I’m not the kind of person who’s gonna mortgage the present for the future a hundred percent. Right? You have to enjoy the moment now, but still, I mean, the more you can save now, the more comfortable you can be later and you might even be able to step off that career ladder sooner.
Yep. Yeah, I, I love that because I agree with you, it, it’s all about balance. We are human and anything can happen at any time. Our lives can change in an instant, and I do believe in enjoying our life now, but also that future, like what does that future look like? What are those retirement accounts? Are they going to be there? I look at my parents and my husband’s parents and you know, all that and I’m like, wow, they’re working longer. Like they’re older and they’re still kind of working and that’s kind of scary. And so that’s kind of where I also really wanted to create a better future that just have that not stress about my future, just to be able to enjoy it, work hard, and just know that I have something to fall back on. I mean, that kind of where my focus has been. Yeah,
For sure. So for me, in that path, you know, one of the first steps that I needed to take was to lower my cost of living, mainly because I really needed to figure out a way to save the capital, to start the real estate investment kind of path. And living in the Bay Area, that wasn’t possible. You know, I was sending my daughter to private school and my apartment was very expensive and that kind of stuff. So that was part of the reason why we made the move up to the Lake Tahoe area. Luckily I was able to find a remote role and so you know, that really helped to kind of lower my cost of living to help, you know, facilitate the savings side of it to generate the capital for the ultimate investment that I wanted to start.
Yeah, I’m, I’m excited to hear about a little bit more about that, but I, wow, I’ve got to give you props for doing that because a lot of people just say, Hey, I wanna become a real estate investor. And they, they learn and they do all the things, but they’re not actually willing to take the action that it’s gonna take to do it. It does require, you know, some deep dive into our financials. A lot of people, I know this for a fact because I used to be this person, and a lot of the investors that I talk to, they don’t wanna look at their checking accounts, they don’t wanna look at their savings account. It’s like a huge, like, stress. Like you’re like, okay, take a deep breath. I’m gonna log into my bank account, you know, can I deal with this today? You know, it is a very, very stressful thing.
And so, but it’s so important to really dive into what are we spending our money on? How often are we eating out? What are our costs of living? And for you to be able to do that, but actually take it a step further and go, you know what, I might actually have to move. That is a huge life-changing decision. So I commend you for really doing that as we were just talking about. We don’t need to give up everything, but to have that better life and that financial security. Wow, that was a, a big move for you.
Yeah, and I mean, it had other benefits too. I mean, obviously it’s gorgeous in Lake Tahoe, so <laugh> Yeah. You know, nobody’s complaining about that. That’s true. But we were able to make like a lifestyle change that was for the better, while at the same time also lowering my cost of living. And luckily, you know, I was in a position in, in the work I was doing in the Bay Area, that I was able to save enough money mostly through saving my bonuses every year and just kind of putting those in a, a high yield savings account to, you know, really get my first down payment. And then we bought our home up here now, and so now we own that home. And so now that’s building equity. And again, because of the lower cost of living, then I was able to really start saving for the investment.
Yeah. So, so going to your very first investment, let’s kind of start and pivot and talk about that. So is that where you got the capital then for that? Was it a hundred percent what you saved? Yep. Okay, great. So do you have any advice for people who are saving? I know you just mentioned a high yield savings account. I think everybody should have a high yield savings account for sure, especially while we’re saving. In fact, I even take it a step further, and you know, when you, when you buy that property and you’ve got your monthly cash flow coming in every month, why not put your cash flow into a high yield savings account as well? Because, you know, depending on how you’re using your cash flow on your property that’s essentially another spot where you’re saving, saving up that cash flow hopefully. And then maybe that’s eventually gonna go into the pool to buy your second property.
Yeah, I mean, to me the high yield savings account is kind of like the, the bare minimum <laugh> effort for what I can be saving. I mean, if you have sort of a timeline in mind, I think, you know, you can do a little bit better with something like a CD and things like that, but I like the liquidity of the high yield savings account, and hopefully usually you’re gonna be at least beating inflation with that. So, you know, I, I, I have that, I did have a couple of stocks here and there that I played with that, you know, did relatively well, but again, it’s just not a safe space for me. So it was a relatively small portion of the overall kind of money. But yeah, I would say that was really step one. And again, when I was still living in the Bay Area, that was really my only option was to just kind of take my bonus from my job every year and just pretend it didn’t exist.
And then that was my capital investment ultimately to what I started doing. And this was just kind of starting to build sort of new habits. Before, you know, we made the leap to a lower cost of living area was I got kind of a budgeting tool that unfortunately no longer exists. I’m actually in the market for a new one if you have any suggestions. But, you know, I would kind of track my spending and I would go back and I would look for about, you know, three to six months and see what my average monthly spend was, and then kind of do a gut check and say, is that higher or lower? Or is there a way that I can reduce some of those discretionary items? And then again, having the ability to track it in real time as you’re kind of spending really kind of helped me to kind of reduce the discretionary spending, which by the time again, we got to the, the Lake Tahoe area and were able to lower our cost of living. I kind of had started to develop some of those habits and reduce some of that discretionary spending, which just helps to lot more money over the fence for the investment.
Yeah, I, I love that so much. And the one thing I was thinking of as you were, as you were talking about that is you mentioned that you have a, a daughter and how have you shared that kind of budgeting thing with her? Or have you, have you talked about that? Is that something you guys talk about as a family? Does she know, you know, I, I’m just kind of thinking of like, does she know you in are saving money to invest in real estate? Do you guys talk about that as a family or is that something you’ve just been kind of handling on your own?
I would say mostly on my own. So my partner and I currently are not married, so our finances are separate. So mostly it’s just me kind of managing my own money which has a simplicity to it for sure. I mean, I’ve, I’ve had commingled assets before for Lucy. I think she’s getting to an age where she’s starting to understand money, but still doesn’t really understand it that well. So actually only about six months ago now, I did a bunch of research on a couple of different apps that they have for kids, and I found one that I liked and I signed up for it. And now she has a certain amount of chores that she has to do every week in order to get her allowance. And then when she finishes the chores and the money gets kind of transferred over into her account, there’s actually a portion of it that goes straight into savings for her.
So it kind of has a checking and a savings account attached to it just for her. So, you know, in that sense it’s starting to teach her to save for herself first, and then everything that’s left in the checking account becomes her discretionary, you know, money that she, I don’t know, she wants to buy a t-shirt or a candy bar or whatever’s of interest of her. She has that money, but that it’s kind of going, you know, a portion of it’s going into her savings account first. This app that I picked also has the ability for her to save specifically for things so she can set a savings goal, like say she wants, I don’t know, like something expensive, like a really nice pair of a hundred dollars jeans or something like that. She can set that savings goal and she can actually take a look at it, transfer money from her checking account into it, or again, every time she gets money for her chores every week, her allowance, she could also set a percentage where of the $12 she’s getting maybe $3 goes into that particular kind of savings goal. So I’m starting to tiptoe into it. I also, this is a bit of a funny one, but I bought her payday, I dunno if you remember that board game.
Yes, actually I do.
It’s <laugh>. Yeah, it’s kind of like a much more basic version of Monopoly. Mm-Hmm <affirmative>. And so we play that about once or twice a month just to kind of get the idea of bills and budgeting, and you have your income that comes in at the beginning of the month, and then you have, you know, unexpected expenses that come up. I mean, it’s, it’s a very basic kind of budgeting game. So that’s kind of helped her to kind of learn some of the concepts as well. But aside from that, you know, it’s, I would say as it relates to my finances, she knows that I’m saving for real estate. She kind of has a basic understanding of that. And then it’s small things where, you know, towards the end of the month it’s like, okay, we’ve, you know, kind of spent most of our eating out budget, so let’s get creative and maybe look in the freezer and see what we can eat at home tonight, or how can we maybe make a picnic and like take it outside if we wanna get outta the house or things like that. So it’s, it’s a little bit more organic in terms of how I talk to her about like my budgeting
Classes. That is so amazing. You said so many amazing things there. Yeah, and I feel like money, at least myself growing up, money was kind of a taboo thing. My parents, which was, you know, in hindsight I feel like I lived in a bubble. I know a lot of people don’t have that luxury of living in a bubble that I never knew when my parents had a lot of money or they had no money or, you know, they never talked about it. It was all very shielded. I never knew, you know, what my parents were working towards or what the retirement looked like or how much, you know, their mortgage or rent was like, I, I never knew any of that. And so in some ways it, it was a nice fairytale childhood to kind of live in that bubble, but on the other hand, it doesn’t necessarily prepare you for when all of a sudden you go out into the, in the world yourself and now all of a sudden you have to figure out a lot of the stuff and you go, oh, you know, there are all these things that can happen and it, it doesn’t necessarily mean the sky is falling, it just is normal for, you know, financial ups and downs for a lot of people.
And I think for, for me you know, I still have that need to want to protect my kids from some information, but at the same time, you know, ultimately I’m building this real estate portfolio for them and they are the ones that are going to inherit it. And the last thing I want for them is to inherit it and not know what it is or what the value is or just sell it all off, you know. So I think it is important to, you know, and obviously each child is different and they all take an information different and are interested in different things. I think that there’s definitely a way to kind of work all of that into our daily lives and share with them what we’re doing and, and what we’re trying to do. I think that is really important.
Yeah, I’m trying to kind of slowly do it at an age appropriate level, right. Is what I’ll say. So I’m kind of just sitting right here for about another year or two. And then I think, you know, once she goes to high school and maybe she starts making money, you know, there’s gonna be an opportunity for her to take some of her income and put it in a 401k so we can kind of broach that topic and the time value of money and, you know, some of those basic things. But for now, I think even just understanding that doing chores goes into your allowance and then you pay yourself first and that you wanna set a savings goal and how it feels different to buy something with money that you’ve saved versus buying it with debt. So like one example, and this is again, in sort of her 13-year-old world, but she cracked her phone screen. Oh,
<Laugh>, we needed to get it fixed. So I found a place that could do it for about $80, but she didn’t have $80 in her account. And I said, look, you’re gonna have to pay me back for this because you know, you need to take care of your technology. So I paid for it, and then she set a savings goal for the amount, it was like $76 or something. And she then had to siphon part of her allowance and it feels worse, right? She’s now getting a sense of the emotional impact of having to take some of her discretionary money and give it to me because she’s already spent it. ’cause It was basically, it’s almost like a credit card and I’m fronting her the money versus I really want those jeans, I’m gonna save $5 every week until I get those jeans. You know, it’s a very different mentality. So Yeah.
Yeah. Just wait until she has to pay interest. Yeah. That’s a whole other blow <laugh>. So, okay, so let’s talk about your first property. So I would love to hear your thoughts on, you’re like, okay, I wanna do this, this, I’ve been saving up money, I wanna buy my first property. And I don’t know about you, but I mean, we, we both live in California and we know how expensive it is here, and we know, you know, it’s not the most landlord friendly area and it’s really hard to cash flow. You know, the, of course the appreciation is here. That’s amazing. But so did you have those kind of thoughts and what kind of led you to buy your first property out of state? I would kind of like to hear how you thought about that.
Yeah. so I worked with, I, I actually, I have a couple of coaches is what I’ll call them. One who I’ve been working with for about 10 years, who got me out of what I will call debt triage and got me up to this place where I could actually think about getting ahead and saving and investing. And then another one who’s a little bit more real estate specific. And so I would say between working with both of these people the first thing that, you know, I really had to do was figure out why I wanted to do this, right? Like, why am I investing in real estate? I mean, to your point, if you’re seeking appreciation versus say cash flow, it will make a huge difference into which market you pick for why, you know, for, for where you’re gonna invest. And so for me, the goal really is to not have to work full-time like a crazy person until I’m 65 years old.
My goal if I can, is to maybe sort of partially retire down to about halftime and call it 10 years or sooner if I can make it happen. And so for me, cashflow was really sort of the goal and that had a lot of impact on which market I chose. And to your point, I just never looked at California. I love living here. My family has been in this state for five generations. I, I wouldn’t necessarily change that anytime soon, but it was important for me to be able to start the investment process. And frankly, I didn’t have the capital to invest in this market. It was just too expensive. And it also, to your point, is really hard to get it to cash flow. The landlord laws aren’t that good. So once I had identified my goal as being cash flow, I kind of did a little bit of research on many, many markets around the country at a high level.
I tended to find that the markets in the Midwest seemed to be not only sort of a lower buy-in from a capital standpoint, but also much more easy to cash flow immediately. Now, I will say with interest rates being slightly higher right now, that’s harder initially than it was, you know, three, four years ago when I bought my first property. But that was kind of where I landed. And so the market I happened to pick was Kansas City, Missouri. So Kansas City is interesting. It actually is in two states. Half the city’s in Kansas and half the city is in, in Missouri. And Missouri has better landlord laws. The prices are a little bit lower. And so that was where I ended up kind of focusing my time. But yeah, that first decision of like, what’s my goal? Why am I doing this? And then sort of looking at the markets and what was the right price point which has healthy landlord laws, which ones are gonna cash flow immediately, those kinds of things like ultimately had me land there as a bit of an aside, I have inspired my partner to start doing this as well.
And he, for example, picked Indianapolis. So, you know, there’s lots of options out there. You just kind of have to pick the one that’s right for you.
Yeah, definitely. And I, I agree with all of that. I mean, Kansas City, the, the entry point is not even close to what we would have to pay here in California. The Midwest is very favorable and price points, but also we can set our expectations and go, okay, if, if we buy, you know, let’s just say it’s $150,000 property in Kansas City, we also can’t expect it to appreciate like California appreciates. Like we, we’ve, we’ve got a give and take. And so, you know, you’re, you’re saying, okay, hey, I wanna cash cashflow. And just so everybody knows that we’re on the same page with that term, that term can mean different things for a lot of people. And I’m assuming that we’re on the same page. The way that I would say cashflow is after all expenses are paid, so, you know, we’ve gotta pay our correct fixed costs.
Yeah, we’ve got our, you know, mortgage, our taxes, our insurance, our property manager, those are the fixed costs. So we, we take those aside and then we’ve got cash flow, and then each investor can decide what they want to put aside from that. If they wanna put aside money that for, you know, a future vacancy cost or a future maintenance cost, then you would kind of take it out of that cash flow. To put that aside, how do you account for when you’re running cash flow and are you putting money aside for vacancies or maintenance? How are you handling all that?
Yeah what I’ve been doing is I set aside, I’m trying to think about what the amount is. I think 2% of the purchase price as kind of a reserve. And so I leave that in my business checking account just in case, I don’t know the, the water heater breaks or, you know, they have to go maintain something or at one point, for example, there was a storm and a a tree branch, you know, fell down and they had to go remove it, you know, those kinds of things. So I have that that I try to like leave in a reserve and then I plus it back up if it gets sort of used just so that it doesn’t impact my personal cash flow. So yeah, I just, I kind of create a reserve for that. But yes, and then in my case too, I would just say, you know, my goal is for these properties to really cash flow in about five to 10 years, like I said.
So for now, I definitely want them to cash flow immediately so it’s not, again, continuing to impact my personal finances. But you know, this, this property in Kansas City is an example. I think it throws off about $200 a month, so okay. Not enough to live on, but what I’m doing with it, to your point, and again, you can decide what your goals are, you can either take that 200 a month and put it straight into your, you know, savings so that you’re continuing to plus up your real estate investment going forward. But since, in my case, I’m not really looking for the cash flow for another five to 10 years, my goal is to try to get, you know, my tenant to help me pay off this mortgage as quickly as possible. So I’m taking that 200 a month and I’m putting in an extra principal payment. And so I don’t actually see any money from this property right now. It basically just breaks even. But I’m also taking an extra 200 a month and throwing it to the principal, which over the course of five to 10 years will make a big difference on a mortgage that’s, you know, around, call it $150,000.
I love that strategy so much. It’s funny because you go, hey, it, it’s only $200, but actually that’s pretty good compared to what was the purchase price of that property?
I wanna say it was about 180 or one 90 at the time, and I put down 20%.
Yeah. So I mean, that’s a pretty good return for what you put down. If you put down, you know, 20%, that’s a pretty good return. That’s well over 10%. You are returning good money on it. But you’re right, like, you know, some people will go, oh, well cool, $200 a month, you know, that’s like my coffee budget or my Starbucks budget or something. And I know it doesn’t sound that exciting, but what you are doing is so refreshing to hear because you are actually making your money work even harder because not only is your tenant buying you a free house at the end of the day on the, their rents, you know, portion of their rents is actually going towards your mortgage payment, but now you’re taking that cash flow and you’re throwing it in there as well. So that, I think that’s a, a really great idea, you know, that way you can, you’re, you’re gonna have that property paid off faster.
And also the other thing too is in the Midwest, like yes, we’re not expecting a ton of appreciation there. It is growing and it is appreciating, so your property is going up in value for sure, but also we have rental increases, especially when you buy in better areas like, like your property that you bought. You know, the ability to raise the rent every little bit that you can every year or whenever the tenants lease expire is really awesome. So by the time you do retire in, let’s say it was 10 years, your rents are gonna be significantly higher as well. So that’s amazing. Now, what I’m curious to why you wanted to do that strategy versus the saving up that $200 and putting it in a high yield, and then that’s property number two is, is that just gonna take you longer to get there?
Yeah, I mean, again, I’m lucky enough because I lowered my cost of living, you know, that I can be saving towards my next real estate investment through just my W2 income. And in this case, I mean, you know, again, the, the sort of the, the theory behind the strategy that I’m following right now, and, and the nice thing about this is it can always change, right? If my goals change or my lifestyle changes or something, but is that, you know, I try to buy basically one property a year for the next 10 years. And you know, then at the end of that timeframe, you know, I don’t know, maybe some of the earlier ones that I purchased, maybe I refi them. So good news, bad news with that is you push the mortgage payment out another 30 years, but you also can hopefully lower your payment.
Now, in the case of this property, I got it a couple years ago when interest rates were really low. So it may not make sense to refi it, but to your point, I think the, the rent has already gone up. I think it’s like 50 bucks a month. So I went from like 1200 to 1250. And so what I do is I basically, I have kind of a, a set of reminders that I go through, and it’s not that often I really need this to be passive. I’m busy, I have a daughter, I work full time, you know, <laugh>. But about once a year I just, I go in and I take a look at all of my expenses and I kind of calculate out how much the property is cash flowing, if it’s gone up at all. And then I take whatever the difference is and I just put it against the principle. So the theory is to pay down the principle faster because maybe in, you know, again, 5, 8, 10 years, I refi it lower the payment and, and the, the smaller that principle is, the smaller that payment will be, which means the more cash flow that I would get in my pocket when I want it.
Yeah, I, I love that. That’s a really great strategy. There’s a lot of reasons why somebody might wanna do that. And to your point, you’re looking at retirement, so you want the most cash flow as possible. So a refinance might make sense for you if that’s where you’re gonna, you know, that’s, that’s your goal, that’s what you wanna do. Another option where somebody might wanna do a cash out refinance would be to maybe there’s major costs on that property. So let’s say you have to replace the roof or, you know, plumbing or, you know, there’s like a major expense. People do refinance their properties, do a cash out refinance to pay for that expense so you don’t have to worry about saving up a lot of extra money for those future capital expenditures. In fact, I had a conversation with an investor about this just last week and when he was running his numbers on the proforma, he was like putting like an insane amount of money aside for capital expenditures.
And he’s like, well, in 20 years I’m gonna have to replace the, the roof and, and all these different things. And I went, yeah, but also so many things can happen in the next, you know, 20 years. I mean, I get it, like definitely put aside enough for savings to cover expenses. If something really major happens, you’re gonna file it under your insurance if it was like, you know, an insurance, you know, act of god or, or whatever. So at least make sure you have enough, you know, set aside to cover your deductible, but your strategies change. And also you might sell your property by then, or you could do a cash out refinance by then and pay off a, a large capital expenditure. Or quite honestly, the, the biggest thing that most investors do is they do a cash out refinance to buy more properties, take some of that money out that’s just kind of sitting there and not doing anything. And then, you know, now you have money to buy a couple more properties. But I love that for all three of those reasons because only you know what your goals are and what you’re trying to do and what is gonna be the fastest route to get you there. So that’s brilliant idea and I’m so glad that you brought that up.
Yeah, and I guess, I guess I’ll just say I have really appreciated these couple of coaches that I’ve been working with for a while. Again, one more broadly on the finance side and one more specifically on the real estate side. I just find it really helpful to kind of bounce things off of them. I periodically have these moments where I get slightly overwhelmed with the complexity of all of it. Also because I’ve set up an LLC structure for the investment properties to kind of, you know, protect my personal assets and also protect all of those assets and income from, you know, when my daughter ultimately goes to college Yeah. <Laugh> and hopefully reduce the financial aid sort of risk or that kind of thing. But I, I think bouncing ideas off of people who know a lot about this and have different objective perspectives has just been really helpful for me personally.
Absolutely. And I’m in the same, I’m in the same boat. I mean, I am a real estate coach, but it’s easy to get inside of your own head and just kind of see like what’s before you or what you’ve done or, or what you’re doing. I need a knock on the head every once in a while as well. I did that recently. I was, I was doing a 10 31 exchange and for some reason my brain was just set on like one thing and I wasn’t thinking long-term and I wasn’t thinking about, you know, what else can I do with the, the capital gains if I don’t do a 10 31 exchange? And it literally took a colleague of mine who’s a coach to just kind of knock me on the head and go, Hey, you’re, you’re blind right now. You’re not seeing this other side. And I went, oh my gosh, you’re right.
Okay, thank you. So it is really easy to put on our blinders and whether it be by experience or anything, to be able to have somebody to help give us advice. Always be open to advice. I think that’s the biggest thing with, with real estate is always be listening and learning. And because not everybody’s experiences are the same. Not everybody’s situations are the same. Not all real estate is the same. And so we’re, there’s 20 different ways to slice and dice this, and we’re all just kind of out there learning. And so when we can, you know, learn from others, you’re just gonna lower your learning curve quite a bit.
Yeah. I I also, you know, I have a friend that I made recently who’s also really interested in this and has a few investment properties herself. And so now we can also bounce ideas off of each other. I almost think of it like a workout buddy. Yeah. You know, like keeps you on task, you know, keeps you excited and engaged and also like, has a different perspective, you know, because they’re a different human being who got raised differently, maybe in a different spot. And so it’s really helpful to even just have a buddy or a friend that you can just bounce ideas off of and keep you motivated. I have to say, the, the other thing that I did when I first started is I started listening to a podcast that I really liked about this exact topic. This is gonna sound like a plug for your show, so we’ll do a shameless plug for your show. But I mean, I, I really just started educating myself that way. And three times a week at lunch I would just go walk around the neighborhood and, you know, put on a podcast and just educate myself. And I think that kept me engaged and motivated. It made me, you know, really understand the topic a little bit more from a couple of different facets and, you know, ultimately just, you know, helped me kind of start to get in the
Game. Yeah. And you know what, you know what I love about what you’ve done is you decided to take action and you looked outside of your own limits. And those limits are definitely market limits and time limits. And you have a full-time job and you’re a mother and you have a partner and you went, okay, I wanna do this, I wanna take action. That’s where a lot of people stop and they go, oh, I can’t do it. It’s too expensive here. Oh, I can’t do that. I don’t have time. Oh, I don’t have the knowledge to do this. I I, I can’t be an investor that’s wealthy People are investors. You know, there’s so many beliefs that people think that just kind of stop them. And you went, no, I’m, I’m gonna do this. I’m gonna make it happen. I’m gonna change my lifestyle and my budget. I’m gonna look outside of where I live. I’m gonna go where it actually makes sense. And you bought property where you’re hands off. We haven’t even talked about that part yet, but this is a passive investment for you. You have a local property manager, you are not doing any of the day to day they’re doing it. So tell me a little bit about how your experience has been with that passive side of it, handing over the control to a property manager.
Yeah. I, it’s, it’s actually, it’s been fine. I mean, you know, you wanna make sure you get a good one. My partner had a bit of a, a rough go with the first property management company that he signed up with in Indianapolis and, you know, ultimately had to switch. I’ve had very good luck with the one that I have in Kansas City, but funnily enough even though I did all of my online research on market, how the rental market is vacancies, you know, landlord laws, all those kinds of things to land on Kansas City, I actually flew there for a weekend to go check it out. Oh, out <laugh> with my own two eyes, which is pretty funny. I mean, most people I think don’t do that. But I also had never been there in my life and, you know, there were a couple of little red flags, like at the time, again, this is a couple years ago, I think it was the murder capital of the United States.
So I was like, okay, there’s a bit of a sketchy element that I need to really like see with my own two eyes and kind of figure out what the pulse of the place was before I felt good about like sinking some money there. And so I actually flew there and did that and kind of checked it out. And I think that sort of helped, you know, make, make me feel a little bit better. And then the other thing that I did is I actually told my potential prospective property management company that I was coming into town and I said, Hey, I don’t know if this is normal or not, but I’m coming if you have the chance for me to come in and just shake your hand and meet face to face, and if, you know, I’d love to see a couple of the properties that you’re sending me, you know, that are available right now, I’d love to see a couple of them.
You know, even if they, they go quickly and there’s other ones, that’s fine. Like I’d love to just go visit some of them in person and see what they look like. So I could wrap my head around if I could see myself living here. Now, I probably wouldn’t necessarily live in my investment property, but I remember really liking the area that it was in and sort of the, the town, it had historic element, but it was also really close to, you know, amenities like a big Walmart and the Target and the Costco and those kinds of things and neighborhood matters. These are people who are really gonna live there as a long-term tenant, so the school district, you know, things like that. And so I actually went and checked it out and I drove around with them for half a day and I met, you know, the office staff and it made me feel a little bit safer about making my first investment.
Yeah, definitely. Yeah, I would, I would say most, most people don’t go visit the market just because they don’t have, you know, the time or, you know, nowadays we can do everything so virtual. But you felt that was important to you and you did that. And I think that’s, I think that’s awesome. Whatever you have to do to feel comfortable, you should do. And if anybody tells you don’t do that, don’t come, no. Or they’re making excuses, that in itself is a pretty big red flag, I think. Like what are they hiding or what do they not want you to see? So I would, I would definitely use that if, if I, were I gonna go to a new market, I would, even if I wasn’t planning on going, I would maybe would just test the, the property manager and be like, Hey, how do you feel about me coming?
Is that gonna be okay? And just kind of maybe see their response right away. If they’re like, happy and welcoming, then hey, that’s a great sign. I think that is really important. Now, one thing that you said that I wanted to just kind of touch on really quickly is you kind of said, would I live there? And that’s interesting. I’ve never thought about that. That hasn’t come up for me when I’ve bought my properties. And maybe just because I’m in the mindset of, Hey, you know, I don’t have to live here, but somebody does, you know, somebody wants to live here, we’re providing safe, affordable housing that, you know, a house that’s been newly renovated and so fits somebody’s budget and you know, housing is a necessity. It’s not a luxury. And so I’ve always just kind of felt like it’s okay. I, I don’t need to live there, but I just wanna make sure it’s a, a nice, safe area for somebody else.
I found that interesting that you, you kind of looked at it like that, but, but then you did say, I, I like that you said, oh, there’s a, there’s a target, there’s a Costco, there’s whatever. And those are important to talk about as well, because that’s a good sign of also what’s going on in the area for jobs. Who is your tenant? Who are you attracting first? And then what are those jobs that that tenant is going to have? And if you’re in an area that doesn’t really have a lot of job diversity and maybe somebody has to travel really far to get that job, I think that’s a big deal to consider as well.
Yeah, and like I said, I mean, I don’t know that, I mean, maybe that was a bit of a, a misnomer. I don’t know that I, I was thinking about it like, could I live here but could I picture someone living here and like, feeling safe and feeling good about this home and the area that it’s in? You know, Kansas City is an example pretty much, you know, no matter how far out you are, it’s really about 20 minutes outside of the downtown area. Very convenient to everything. So, you know, I don’t know, I just, I, I felt better for my first investment to really go check out the market. ’cause The other thing too is, you know, I’m hoping to really probably buy more like three properties in the area before I move on to a new market. And so before I sink that much capital into one place, I just, I felt better about seeing it for myself and sort of envisioning like, would someone want to live here? Maybe
Not me. Right, right. Yeah, absolutely. I, I agree with that. Yeah, I have a lot of properties that I’ve never even seen. Like I’ve, I’ve never flown there. I dunno, the state <laugh>, I’ve never seen them. But also that, that has come with, with confidence. I mean, my, my first couple properties I bought absolutely, I was out there previously, not at the time when I bought them, but I at least knew the area previous. And so that gave me a little bit more confidence. But it definitely is kind of a working up point. It is scary. And I, and I validate that for anybody going, wow, I’m buying a property 2000 miles away. This is a little nerve wracking. It absolutely is for everybody. And so you just have to check off the boxes of, of what are the biggest concerns for you and what will make you feel more comfortable. And I think, you know, outside of traveling there and being there is having that local team that support property management is huge. So just tying back to that property management, have you experienced anything that you could give our listeners of maybe advice working with a property manager? Do you feel like you are managing the property manager or do you think that they’re communicating with you? Do you feel like there’s some areas to be worked on or, or just kind of what have you experienced around working with a property management company so far away?
Yeah, I mean, I think the thing that I like most about, you know, the current group that I’m working with there, and that, I guess if I think about that translating to a different market in the future, is really having one contact, a real person that you can call or email if you have a question or if something comes up. You know, I mean, just that small amount of just like a real person, that kind of personal touch I think makes a big difference. You’re emailing kind of an info@propertymanagementcompany.com and you’re getting maybe different people replying. It feels a little bit less personal. So to me, especially because I’m so far away, like knowing that there is one real human being who I can call, who I know their name, you know, they, they know me. They probably have a Rolodex of at least a hundred of me as an investor.
But still, it just, that I think really helps me feel comfortable emailing them. Honestly, I really don’t contact them that often. They contact me if something changes, like if there’s a maintenance issue or some kind of terms change or if, you know, the lease is about to be renewed or, or something like that. But it, I might contact them once every four months, you know, or I get an email from them about that often. It, it truly is passive, which I appreciate because I don’t have a lot of bandwidth for anything more than that. But I would say having one person who you trust, who’s responsive, who you can reach out to if you need something once in a blue moon, is really the thing that makes a difference for me. And to your point, they live there, they know the market, you know,
That kind of thing. Yep, yep. I love that. That is such great advice. And one of the things that’s really common with property management companies is they have an online portal system. And so when you get transferred over to their account, they sign you up, you get your own login, and anything that goes on in that property generally comes through the portal. So you can log in at any time, you can see, oh, there, there’s the rents. They pay, you know, the tenant paid the rents. You can pull up statements. And if there was a maintenance call, you know, it wasn’t a, it wasn’t a huge bill, you might not have gotten a call for it, but it’ll show up in your portal. That’s been huge. I think for, you know, most of my investors and myself, gosh, I have, I, I can’t even remember the last time I talked to one of my property managers on the phone, <laugh> quite honestly, because all communication is done through that portal.
And I’ll get a quick email and I just go, okay, yeah, great. The, the tenant just renewed their lease. And I would respond back and go, great, are you going to increase the rents? Is that an option? And that is a strategy. If you’re going to think about raising the rents is at the risk of losing that tenant would be, you know, the con side of that. Of course, we all want more money, we want our rents to go up. But at the same time, if, if I have a good paying tenant and I don’t want to have a vacancy, then I, I might not raise the rents on them. So, but I always turn it over to the property manager and say, you know, of course I want more rents, but I don’t wanna lose the tenant. What do you think? And a lot of that is just through email communication. I agree with you. I think that’s great advice. I know a lot of people are, Hey, I wanna pick up the phone and talk to a real person, a real voice or email you know, a person specifically. I love that. Yeah.
It makes a big difference for me, especially since I’m 2000 miles away, to your point.
Yep. Having that local boots on the ground is everything. And you know, in the beginning it is a little bit nerve wracking. You, you haven’t done this before and you don’t know how it’s gonna work. One piece of advice that I always tell people is, you know, you can always, I mean, we know property managers are very important, but you can always move property managers, like you mentioned, your partner had, you know, maybe a discrepancy or an issue or something with theirs, and they move to another one. Especially in high rental demand markets like Kansas City and Indianapolis, there’s a lot of property managers out there. Ultimately, you can’t move your property, you know, you buy that property and it’s yours and until you sell it or, you know, but you can move property managers. So it is important to be with the right one.
And sometimes that communication piece is a bigger deal to some people than others. And so it’s just a matter of finding the right property manager that maybe communicates with you the way that you prefer it, or, you know, a property manager that just isn’t willing to just throw out the tenants and you wanna work with tenants if somebody’s paying late on their rents and, you know, you need to work with somebody who aligns with your vision for your property and, and your tenants. So, yeah. So I think some people are afraid of that, getting a, you know, a terrible property manager and Oh my gosh, what am I gonna do? It is, it is a fixable thing. Yeah.
You, you definitely can switch. And yeah, I mean, even my tenant who’s now been in this house in Kansas City for almost two years, you know, there have been a few months where he doesn’t make the full payment on time and he knows what the penalty is and he pays it and they talk to him. I mean, literally, I don’t know any of this until I get the end of month statement, but you can see it because, you know, there’ll be two thirds of the payment that comes in on the first and then another, you know, however much that comes through a couple days later. So they really manage all of that, and I’m very thankful for that.
That is amazing. That’s the goal, <laugh>, we wanna make this as passive as possible. So let me ask you a couple more questions here and then we’ll kind of wrap this up. What advice would you give someone who’s considering buying their first rental property 2000 miles away? You know, even if it was 500 miles away, what, what is the advice that you would give somebody?
I mean, I have to say, like since having bought my first property as an aside, I actually transferred some old 401k money into a self-directed IRA, and I just recently purchased two new additional properties through that in a completely different market that by the way, I didn’t fly to, I guess I just, the longer I’ve sort of been part of this and I’m getting a little bit of experience under my belt even passively it’s definitely kind of helped my confidence. So I would just say, do your research, whatever you need to feel comfortable, if part of that for you is, you know, making contact with a property management company and making sure you feel comfortable with them, how organized they are, what the portal looks like, what the communication will be like, just whatever you need to do to do that, go for it.
I mean, I just, having started getting into this, I just, I’m frustrated. I can’t do more of it faster. And I would say my kind of fear of investing has definitely kind of decreased over time. That’s not to say there isn’t risk in real estate investing if you don’t do your research, but I just, I’m such a huge proponent of this as an investment class. I like the tangibility of it. I like that, you know, I’m providing housing for people. You know, I think I’ve, the stat I’ve heard is by 2030 there’s gonna be a million house shortage in this country, so people are gonna need places to live and places to rent. And so in a way, I almost feel like I’m doing something good for the society as well, because I’m providing safe, renovated, you know, homes for that people can live in at, you know, the market rate. So I, I would just tell people to go for it, but do everything you can to do your research in advance, you know, get to know your team and go for it. <Laugh>
Amazing. Amazing. Yeah. You know, you learn by doing. And I’ve never spoken to an investor that said, I, I regret getting started. Even like you said, there are some risks in, in real estate. It’s not all unicorns and roses, but I firmly believe that if you have a, a strategy and a and a goal, like you’ve set goals for yourself and you mentioned you wanna buy, you know, one property a year it gets a lot easier. The more properties you own. Not only because you just, you know, you’re more experienced investor now, but now your property start working like a portfolio. You know, they start like a, a stock portfolio, they start working together. And so, you know, if you have one property and you have one, one problem with it, let’s say the tenant isn’t paying rent, it’s very stressful, right? To, to go, oh my gosh, I, I, I still have to make that mortgage payment and I’m gonna have to dip into the reserve account.
And, but now all of a sudden you have two properties, three properties, and guess what? The, the chances of them all being vacant at the same time or having a maintenance expense at the same time is extremely rare. And so the more properties you buy and you’re building this portfolio, they work together and they support each other and you get more confident as an investor. ’cause Now you can like focus on scaling your portfolio and you’re not as hung up on the beginning things. And especially what you just mentioned is you said you wouldn’t mind getting, you know, three properties in, in one market. And I think that’s awesome as well because you’ve already done the work there. You already know that. You’ve got proof there, you’ve got a team there. And so, you know, why wouldn’t you take advantage of that and, you know, go a little bit deeper in that market.
And then also, you know, you mentioned you went to a new market and now you have something to compare. You can now compare your Kansas City market to the other market that you’re in and go, wow, what do I like better? Which property manager do I like better? You know, and then you can kind of say, okay, now I’m gonna double down, you know, in that market or this market. It really gives you that kind of perspective. And so I thank you so much for everything that we talked about. We talked about so many amazing things, and I just wanna congratulate you and congratulations on doing that is truly the, the biggest step and the, the hurdle for most people. So anyways, anything else as we’re wrapping up here? I know you kind of talked a little bit about your plans for real estate investing, but is that kind of your next step is figuring out how to scale more and those types of strategies then?
Yeah, I mean, I would say my biggest hurdle is just continuing to save up enough capital to continue to acquire. And again, as I’ve gotten further into this, I’m starting to learn more about what I’ll call creative financing options. And I mean that in a legal way, but <laugh>. But there is, there’s many options out there that I think I didn’t, you know, really realize existed. You know, I remember listening to one podcast about a gentleman in his twenties who, you know, was able to save up enough capital or got some investors and bought a five bedroom house and lived in it while renovating it, renting out the other rooms. And then he would basically try to just take all of the rents from his roommates and stuff it into the principal and save up up enough to do it again in two years, you know, to kind of make sure that was his primary residence and do it that way. I’m not at a life stage where I can do it that way, but the, the more and the deeper I’ve gotten into it, the more I’ve learned. And I would say there are just so many different opportunities out there. You just have to kind of look for them, listen for them, and just be open to them. And, you know, it’s, it’s not necessarily always on you to just come up with the capital yourself for the down payment.
Yep. Absolutely. I, I cannot agree with you more on that. And also, you know, I do believe that there are baby steps and I think you’ve taken those baby steps and you’ve learned a lot and now you’re open to those more, I’ll call, you know, advanced strategies or creative financing that are more risk la you know, a little bit more risk involved in some of those. But now you have the confidence because you’ve already taken action and you’ve already seen successes in what you’ve done. So I think there is kind of a, you know, a starting point baby steps for everybody and the way that you’ve done it, I think is really encouraging to others. Thank you so much. I love your story. I am very inspired by it and I’m sure our listeners will take a lot away from it too. Let’s wrap this up. And I wish you all the best in your future real estate ventures, and I can’t wait to, you know, maybe in a couple years we’ll come back and we’ll recap and we’ll talk about all the other things that, that you’ve done since this one. And then I would love to just have a quick call to action to my listeners. I hope you enjoyed this episode. Don’t forget to subscribe to the episodes. And until next time,
Thank you for joining us on today’s episode of Real Estate Journey, where we explored the inspiring story of a successful investor and the valuable lessons we can all learn from their experience. We hope you found today’s discussion insightful and picked up some useful tips along the way. Don’t forget to subscribe so you never miss an episode. We truly appreciate your support and thank you for listening.
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