Computers replaced his job - but then he found RE investing.
And is now making $30k per month in cash flow income.
Storytimeđ§”đ
Usually, you only hear stories of big-time RE investors making millions.
And a lot can be learned from those who have achieved tremendous scale.
But to me, nothing has been as refreshing and inspiring as coming across people living under the radar and leveraging RE investing in living a very fulfilling life.
I learn way more!
This thread attempts to radiate one such story I encountered the past week.
My goal is simply to educate and motivate without taking any stance.
Everyone is different, so please be thoughtful about the risks.
Let's jump in.
I'll be sharing the story in a QnA style:
- to avoid including any bias
- because paraphrasing dilutes the insights
Here we go!
đWhat is your pure cash flow(profit) income per month right now?
Right at $30,000 per month on average.
đWhen did you start doing REI? How many units do you have?
Started buying single-family homes in 1998, and started building new construction units in 2004. Currently at 143 units, 91 of which I have built. 24 more are under construction
đAt what cash flow income did you quit your W2 job?
My âW2â job was ended for me. I was a floor trader at the Chicago Mercantile Exchange for 25 years.
All of it migrated to computer platforms & I was let go.
Scary, but turned out to be the best thing that ever happened to me.
Iâm still working 60+ hours a week. Itâs a tricky question because my lifestyle needs are few; I could have stopped building my empire years ago.
đHow many hours per week do you devote to REI? How many hours did you work on your W2 job?
I work 7 days a week: developing, contracting (I currently have 10 duplexes under construction), property managing, and lots of other stuff.
The trading pit I was in Chicago was open from 9:05 to 1:00 five days a week, so back then, it was less than 20 hours a week.
đWhat led you to pick RE?
I found myself living in a small town in Arkansas after I was let go and saw many RE investors living the life I wanted, and it was clear that RE was the path to take.
đHow much initial capital did you start with? How did you get this funding to invest?
I used all my savings and bought my first house for $34,000 and put about $6,000 into improvements to it.
đWhat's been your strategy?
I am 100% a cash flow guy.
I never even think about appreciation, which is good because there hasnât been a lot of it in Arkansas.
After buying about 9-10 houses, I started realizing that my best tenants were senior citizens.
I also realized that I was tired of the endless fixing that comes with crappy old houses.
So in 2003, I hired an architect, and we came up with plans for a 4-plex. I had an employee who acted as a contractor, bought a piece of land, and finished it in 2004.
Declared it a 55+ property, and itâs had an occupancy rate of over 99.5% for 18 years.
I canât even think of the last time that it had more than a couple of days empty. Kept tweaking the plans and building more.
đWhat's your buying criteria and how did you decide on it?
I only buy in decent neighborhoods, and I only build my senior units pretty close to a hospital. I donât do any calculations except the 1% rule. I like to move quickly knowing RE investing is very risk resistant.
đDid you have partners? How did you decide who to work with?
No partners. I work with several local banks with whom I have a lot of faith in me. They should; Iâve never missed a payment in 24 years. Currently at $10+ million in debt.
đWas there a turning point that helped you go faster? Or what was the best decision you made?
Losing my career was what really pushed me into overdrive. Best decision I ever made was to concentrate on the senior market.
They rarely move, donât tear things up, and pay their rent.
Plus, thereâs a lot of satisfaction in providing quality housing for folks who are getting up there in age.
Almost all of my tenants are between 75-95 years old.
đWhat were your biggest fears? How did you get over them?
I didnât have any. I had nothing to lose.
đWhat's been the hardest part of your journey so far?
The stress of some of the issues that my older homes and apartments present.
Some things were built so poorly back then that you can pour large amounts of money in and still have ongoing problems.
đWhat were the biggest mistakes you made? If you had to start over, what would you do differently?
The biggest mistake I ever made was probably also my biggest money-maker. Weird, right? I bought a 24 unit apartment complex in 2008. Got it for a good price, good location, etc.
But it was built in the 1970âs and hadnât been updated much. Itâs also an all-ages complex, so I dealt with more difficult tenants, evictions, etc.
I had been building new units steadily up to that point, but this complex sort of took me out of that mind-set.
If I had to do it over again, I would have blown off that complex and kept plugging away at building new units.
I took a 6-year break from new construction, never should have stopped.
It is much more satisfying to build and manage something you can be proud of.
đWhat tools, apps, resources, skills, techniques, and habits were most useful to you?
Iâm a numbers guy, born that way. Iâm also a big believer in positive self-talk and visualization. I was a multi-millionaire in my mind many years before I actually was on paper.
I also make very quick decisions. Eg- I stopped by a ladyâs house that I bought in July from cause I heard she might be moving.
Within 5 minutes, we had agreed on price and I had written her an earnest money check.
No inspections, no contingencies, no complications.
đWhat's your advice for W2 earners setting out to be their boss?
Just do it. Read âThink and Grow Richâ and books like it. Be successful long before you are.
Buy in low-cost areas,
I lived in Chicago for 25 years but never bought anything but my personal home up there.
Spend money. I tried to do too much of the work myself in the early years. It wears you out.
If I had spent an extra $5k on each unit I wouldnât even remember it today.
And I wouldâve bought 2x properties b/c it wouldnât have been such a slog. Donât be afraid; itâll work out
đWhat are your future REI goals?
Iâm moving into adding short term rentals to my portfolio. I have some incredibly beautiful pieces of property that Iâm putting them on.
Another goal is that I want to stop buying existing properties.
Itâs stupid for me to buy anything older when Iâm busy building new duplexes. But I have a hard time passing up a good deal.
đWhat are you looking most forward to when you reach FI?
I donât like to be told what to do. Iâve been my own boss since 1990 and have never made a resume. The only real extravagance that I enjoy is international travel.
Iâve been to the Greek Islands 9 times, New Zealand 3 times and over 40 other countries.
Heading back to Iceland and France next month and back to Thailand in December.
Itâs nice never to have to worry about money.
That's a wrap!
âïžPlease comment "more" if you want more stories like these.
Hope the story shows what's possible and that anyone can do it.
Also, note that the goal of this thread is to expand your purview.
I am not advocating that you should do the same.
Everyone is different, so please don't just blindly follow the insights here.
Consider your unique dynamics before picking your strategy.
If you want more of such stories/insights, join >4,500 subscribers on:
supermode.io/newsletter
Vidit Saxena
@supermode_
Sharing learnings on investing and building a private equity shop in real estate. Ex - Mckinsey Newsletters - zeroflux.io and supermode.io
