Remote Real Estate Investing for Financial Independence

0:00In all my research and all my Endeavors I had figured out that single families were a great place to invest and multif family wasn't a thing like a term even that I knew I just knew that apartment buildings were were really expensive and for rich people only and so it wasn't until like I literally stumbled into this so the job that I was working at the time I was working as a professional fly protection engineer traveling all over the country mostly Western us but wherever I happen to be I would just hop on Zillow because I was a real estate investor now and I would look at Zillow and see what things were buying for or selling for and renting for and I realiz like holy crap you can buy like a Triplex for the same price as you could a single family and the rents weren't 3x but they were 2.3 or 2.5x and I'm like this is crazy so

0:48I started buying up as much as I could wherever I happened to be where the numbers made sense and so like I bought a triplex in Alaska for 300,000 and I'm like I didn't care where it was I cared if the numbers made sense and so that was all fine well and good until it just got to be way too overwhelming trying to track down six different property managers for six different properties and trying to keep mental space in my head which one is which and which filing is due and which state and all this sort of thing so I got some really great advice from a friend of mine he says Michael go focus on one maybe two markets hit him as hard as you can watch what happens it'll blow your mind and I was like I don't know man and that's like totally counterintuitive to everything I thought I knew about investing diversify right you want to spread the risk but

1:37That's what I did he was a lot further along in his real estate career than me and that's what I did and he was right like the the results totally blew my mind I was able to get laser focused on one particular market then I'm making one phone call to one property manager to get updates about six properties I get to hone in and really really learn the market much better than if I was kind of shotgun approaching if every new market I went into I had to go relearn that market who are the players what are the rents what are the economic drivers what's the market like and that's all fine well and good if you have the time and and bandwidth to do that I was running out of those things and so I said I got to go get laser focused and I fell into multif family commercial multif family investing so for those of your listeners who might not be familiar that's five units Plus in a building so

2:25Residential is 1 to four commercial is five plus and again it was because of the costs like my first commercial multi family property I bought was in Northern Kentucky for $300,000 for an8 unit wow so I was just like yeah wow I couldn't believe it I couldn't believe it so I was I was going where the numbers made sense and I was very focused laser focused on cash flow that was the whole point of my investing because I said this is something that I want to replace my job income I need the dollars today appreciation was just kind of a cherry on top in my opinion well what Market do you end up landing on you so the ones that I'm hitting laser focus is Northern Kentucky which is called Covington and then just across the river is Cincinnati Ohio so technically they're two markets but in effect they're really one yeah

3:14I've done a lot of analysis in that area with with my short-term rental program and there's some really great cash flow just because of the affordability there's still yes you know it's a big population center it's there's a lot going on there so yeah that I can see how that would make a ton of sense to to focus in on and and you're speaking my language focusing I highly recommend that to everybody I work with as well with short-term rentals people say I want to own a vacation rental in every city I want to visit and I'm like that's great but you're going to have a full-time job creating a new team in every single location and tracking down like what's the laws there what's the you know building relationships with all the vendors and stuff like that whereas you can go deep we've got all ours other than we we have a secondary Market that we just started but for the most part all of

4:02Our properties are within a 5-minute Drive we've got a centralized inventory system where one of the garages we converted into a big inventory system so we can restock all the different properties and we have a head cleaner there and oh that's so clever yeah yeah so it's I I fully agree with you though people think they need to diversify way too soon and I think getting in those economies a scale make a huge difference yeah and the other thing that I realized which wasn't on my radar is like you can diversify within a particular market so like the fact that you're all 5 minutes away if you went 10 or 15 minutes away you'd probably be in some different neighborhoods or some different submarkets and you would be Diversified absolutely that makes sense that makes total sense and and after your experience investing in all

4:50These different types of of asset classes I know you focused in on the market then that made the most sense for you did what's the what's the one that you think is the best in your experience and what do you what do you look for now what's a deal for you oh man that is a great question kiry Ah that's so hard to answer so so and the reason it's so hard to answer is because so my wife and I converted our prior to primary residences say that five times fast into rentals so we we bought them with the intent of converting them into rentals after we moved out and we did that and so from a performance basis believe it or not those those two are probably our best performing assets and they're in California and they cash flow which is really challenging to do it helps that the interest rate on that debt is like 2.8 so

5:40It's kind of an anomaly but just from a cash flow and appreciation perspective like those two are probably the best but from a long-term rental perspective I'd say that the Northern Kentucky Cincinnati Ohio market has been amazing there's been a ton of growth in that area I would say that the terms of like the long-term rentals the the Northern Kentucky and Cincinnati Ohio markets have been amazing for all the reasons you mentioned like it's a very affordable Market they are very diverse economy and so there's a lot of economic drivers in that market which is the whole reason I started investing there in the first place so people are moving there it's affordable they are making good incomes so they can afford their rent afford their housing payments it's very tenant friend excuse me very landlord friendly States so the laws are very favorable to to Property Owners

6:29And there's been a ton of appreciation like in those markets both organic and forced so I think it it just checks so many of the boxes for me and what I was looking for that if we rule out kind of the uniqueness of the California properties I would say th those from a pure investment are going to be the best yeah and and you're still focused on five unit plus Properties or you buying single family as well yeah you know I've been I've gotten kind of more opportunistic over the years and it's funny because when I first started buying these these 5 to 12 units was kind of where my sweet spot was nobody else was buying them and so I'm looking around I'm like like what do what does everybody else know that I don't like what am I missing and it wasn't until a couple years later that they kind of became the new hot commodity that everybody wanted you know small commercial multif family at the time it was too big for the

7:17Mom and pop investors and too small for the institutional players or the really big players they didn't want to waste their time with that stuff so it just it it totally worked for me so since then it's become more popular everybody and their brother and sister wants to get into that that style of property so I've been opportunistic I bought some short-term rentals during the pandemic kind of like everybody else did paid way too much for them at the peak of the market got sucked into the gold rush so to speak but those so those were some single family pickups that we that we purchased but so I'm I'm open and and looking always looking yeah that's awesome that's awesome I'm a huge fan of that as well we use believe it or not these these you know small multif Family Properties whether it's two three four five unit

8:05Properties as short-term rentals and those can do phenomenally well too in the right area you got to obviously be in the right area but but yeah that's that's awesome so one of the big push backs I get from from a lot of people I talk to is they're they're like can you really do this remotely you just mentioned you lived in California you live in California you invest in Ohio which it's quite a distance apart so how do you how do you do this remotely and what do you recommend to people who are thinking about that so it's funny because I get the same question from from the folks that I work with all the time yeah and I think it's a mindset thing like for me it it was all that I knew and so it was a little bit easier so doing it remotely was was kind of all that I knew and

8:53So I was blissfully ignorant I would say and it wasn't until I I so my first property that I purchased was in Southern California like I was sharing with you and that was a market that was like a 5H hour six- hour drive from where I lived so remote is kind of and so I was like oh like I'm not used to being able to drive by these properties anyhow so what's the difference if it's a six-h hour drive or a six- hour plane ride I'm still having a manager manage it I'm still doing the due diligence I'm still getting all the right people involved so it didn't matter to me I wasn't someone that was used to being able to go drive by these properties and so once I realized okay well I don't need to do this just in California or in the market I live in I could literally go anywhere the whole United States became my egg and frankly the world at that point and so I think for people

9:42That are get caught up on that like I got to go see it I got to go touch it like do that go touch go to the market that you're interested in investing and I say this with a caveat because I didn't go to the Northern Kentucky Market when I first started investing there I I made several purchases before I had ever been there wow and the thing that I share with people is like picture this you go to a remote Market you fly there for the weekend and you're about to go on a property tour and you drive yourself to breakfast and you have a a crummy weight staff that's gives you attitude and the food sucks and you go out to your rental car and you got a parking ticket you're not going to have a great time the rest of that trip I can almost guarantee it and so you're going to start bringing in these personal biases into what should otherwise be a purely data driven decision now

10:31Conversely if you have an amazing time and have the most wonderful weight staff and everybody is super friendly you might again put your own personal bias and think wow what an amazing town I want to invest here even though the economics may not make the most sense and so when we can remove the the emotion or that personal bias from the decision I have found that to be a better decisionmaking tool as opposed to letting my emotions get in the way and so for For Better or For Worse again however that trip turns out to be is going to likely influence the decision but so if you can be truly and purely data driven it makes it makes this whole remote thing much easier in my opinion yeah I fully agree and you not only were remote but you were living in a van

11:19You know working full-time and buying real estate so what what was that like I mean how how did you manage all that yeah it was man it was a trip was really funny like so so we were all over doing van life during the pandemic and so the thing that I think most people don't realize about buying real estate is that you need internet connection and a cell phone and like access to a notary which you go to any UPS Store in the country they will have so we would wherever we happen to be if we were doing a deal like out in Ohio and I happen to be in Colorado we would we drove to the notary and got the paperwork signed and scanned it back to him and then emailed it to or and then sent it overnight back to the title company and it was just as if if I had been living at my home in California so the I think the

12:08Funniest piece of doing this remotely though was actually so my wife and I were traveling for the better part of the year after we first got married and we were in Latin America and I a deal came up and I was like oh we you know had to jump on it and so we were in we were in Panama and they I was like okay well how am I going to sign these documents because Ohio at the time wouldn't allow for like electronic or worldwide notaries they needed signatures and so I like okay well I looked it up and I said okay I can go to the Embassy and in in Panama City in the capital and I can make an appointment there and they'll allow me four signatures four notary signatures I'm like ah shoot I think I need like eight or nine so I don't think that's going to work so I'm like okay so I ended up flying from Panama City to Miami Florida in the morning ubered to from the airport to the local UPS Store got this got the signatures I needed ubered back to the airport and flew home

12:56Or flew home flew back to Panama that night and met up with my wife for dinner and so I was like this is nuts man but where there's a will there's a way and so there's there's totally totally ways to do it that's when you know you're a big-time investor when you're flying between countries to sign documents you know it was it was a really funny it was really really funny that's awesome no that's great I I want to hear a little bit about financial Independence it's a term that has grown legs over the last decade or so quite a bit and a lot of people Define it different ways I'm curious what your definition is of fi and then what you would recommend to somebody who's just starting who that you know that's their goal what what are the first steps you'd recommend taking yeah it's a great question Kirby and I think we

13:45Think similarly that it has changed and and metamorphosized over the years so for me what it was is is being able to pay your daily living expenses from things from income other than your job and so whatever ever your daily living expenses look like if you're M if you're covering those with with income again not associated with your job you're you're it and I know the Bigger Pockets folks have coined you know lean fire or fat fire big fire I forget all the various terms but that was what it was for me and so when I hit that it was much easier to do because my wife and I said hey well let's get out of the country let's go travel for a bit so I was earning money in rental dollars and US Dollars and spending in pesos or Colones whatever the the currency where we were happened to be and we intentionally went to countries

14:33That had a cheaper cost of living where the dollar was strong so that was was fairly easy is the wrong word but we were able to hit that Milestone much earlier than if we had been staying in the US so once we came back to the US actually it was during that trip when I had these two fires I got a phone call from my property manager on a Sunday he's like you probably wondering why I call you on a Sunday like yeah I'm in Costa Rica what's up he's like ah we had a fire so so that was a bummer so I was like okay we need money now so that's actually when I started going back to work and I essentially fell out of financial Independence so to speak because my cost started skyrocketing and income was was not enough to to cover that so it's okay let me go earn some additional income to to be able to pay for the hole in this in this proverbial syncing ship so that I don't lose the thing and

15:21I think that's something that not a lot of people talk about my guess is because it probably doesn't happen to most people I feel like that was a bit of a unique circumstance that falling out of financial Independence but by that same token if we think about it in the sense of having a family or getting married or doing something other than you're currently doing your life circumstances changing it could very easily happen and so birth of a child is a big one like your expenses are likely to go up and so I think it's really important that people be thinking about okay what is my living situation today but also what what I like it to be in the future and so how do I plan for that and not necessarily leave their job the minute they can cover their living expenses in today's dollars and today's expenses because it is likely to change and so the other thing I I would say to people who are just getting started is a like

16:10Don't leave your job too soon there are so many benefits to having a job the ease of lending is is Leaps and Bounds above that of someone who's a sole proprietor I ran into this issue I had lots of of great rental income but the bank was like you don't have this for two years I literally couldn't get a loan so we had to use my wife's W2 to go refinance our property so it was just it was more challenging than I knew about and then so many other people make it out to be the other thing I would say is if you're just getting started and this is something that's important to you live as far below your means as humanly possible I was working as an engineer earning a great salary in the Bay Area California I had five roommates people looked at me and they like what are you doing you could afford to live on your own I'm like I could but I'm not

16:58Going going to because this other thing over here is super important to me I mean my wife and I lived with those same roommates in my bachelor pad house when after we got married because this was something that was so important to us and so there's I don't know remember who said it might be Dave Ramsey quot like live like no one now so you can live like no one else later and so I I would say be willing and ready to sacrifice stuff and and do things differently than than other people and then I would say the third piece of advice for someone just getting started is look for a job that is going to pay for a lot of your cost of living and so this is this is kind of Niche but because I was an engineer traveling all over the country they paid for my cell phone they paid for my internet they paid for all my travel and I was gone all the time and so oh they paid for my car like car

17:47Insurance I had full medical dental health insurance type stuff but whenever I was on the road I was incurring Zero costs they would pay for my meals and I had a company credit card so like I would pay for all the things I need to live my life out on the road and so when I was living at home it was like food and my rent and because I was living with roommates I didn't have my rent was was very inexpensive so think about ways to engineer your life to be able to maximize your savings and so those are a couple different ways to go about it and I I happen to be doing both and so definitely felt like it was a cheat code for me to be getting ahead during all this oh