Let’s say you’re in your early 20’s and you find yourself working for an investment bank. A career many people would envy! Yet over time you realize that it’s just not for you. What do you do?
Do you stick it out – collect the salary. Have two or three nice vacations a year. Work to get promoted. Buy a nice house. Keep climbing that corporate ladder?
Or do you hit the ejection seat and dive into rental properties? This week we will be hearing from one suck investor.
Let’s light this candle – I’m pleased to introduce you to Only Long!
How many doors do you have?
15 doors across six properties
What got you into real estate investing?
I grew up in New York around many people who had created incredible wealth for their families through owning and operating RE. Additionally, my best friend’s family was involved in MF RE at scale for several decades. So, I was always interested in RE investing. – but was not necessarily able to act on that interest yet.
Fast forward five to six years later, and I’m working full time at an investment bank in Minneapolis, hating every second of it. Toggling the inputs on a model and shifting shapes around a slide got old quickly. Biggest of all – I wasn’t doing any actual investing at my job. I was sell side. I wanted out and wanted to give it a go on my own.
Even though I had been investing in the equities markets since I was 12 (I’m 26 now), I knew that would not be a consistent stream of cash flow to support me. I needed an asset that would give me consistent cash flow and flexibility. This is ultimately what propelled me into real estate as I left my job and went on to be a full time RE investor.
What market(s) do you operate in?
How would you describe your portfolio?
Sponsor – DealMachine
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What are you currently buying?
Small multifamily in Colorado and Muskegon, MI
Tell us about your biggest mistake in real estate?
The fourth MF property I bought (triplex) had an incredible rent roll at signing. The property needed some work – but it was the location and cash flow that I was attracted to. Two weeks after closing – every single tenant notified the PM that they were vacating EOM and had let the previous owner know months ago (which he did not disclose). Suddenly, the property wasn’t so attractive. I ended up having to do ~$10K in turnover repairs/updates and didn’t collect any rent on the property until month three. Luckily it was an off-market deal that I negotiated well, and now is one of my most consistent performers. Several lessons in there.
Tell us about your biggest win in real estate?
My second MF deal was an off-market duplex that needed some TLC, had two tenants undergoing eviction, and an exhausted owner who just wanted to be done. He offered me a great deal – I countered at about 20% lower. To my surprise, he accepted.
Over the next three months the PM and I worked with both tenants to help them find rental assistance programs and new units (forgiving any unpaid rents and damages) as we filled for health and hazard on the property. I got the work done to the property and the PM got it inspected, rental certified, and rented quickly after that. Today that property is worth over 2x what I paid for it based on comps through August ‘22.
Outside of real estate what else do you invest in?
Stocks, Metals, Bitcoin, Personal Health/Fitness
Books people should read before investing
The 80/20 Principle, How to Win Friends and Influence People, Rich Dad, Poor Dad, …Your Entire Closing Package!
What advice would you give to a new investor?
My advice to a new investor would be to take some time to mull over all the aspects of a potential deal. Look at it from several scenarios. Avoid paralysis by analysis but recognize that things are easy to miss when you have the deal blinders on. So, get into a habit of creating systems that prevent you from overlooking any aspects of a deal. The same goes for managing your assets; having systems in place makes for easy work. My recommendations would be a due diligence checklist and up to date/accurate accounting records from day 0.
Monday’s podcast is all about ADUs – Accessory Dwelling Units. Who would’t want to convert their single family to have one or even two extra doors? Trick is that it’s easier said than done.
Episode: 5 Top ADU Myths with Derek Sherrell
For those of you in the know – my wife and I are moving. As discussed in a few previous newsletters we’re currently renting an apartment. For various reason – namely we like the ability to pull up stakes if we want to.
Meaning we saw first hand how insane the rental market is. If your application is not first – you have no chance at getting the apartment. Towards the end of the hunt we were just applying (sight unseen).
We ended up landing an apartment by finding someone looking to sublease their place then negotiating a full 12 month lease with the property manager. Homelessness has been averted.
But this experience has been helpful in understanding what our tenants are going through right now. If you’re operating in a big city – you have all the cards right now. At least until things start to cool down (literally and figuratively).
Why You Need A Rockstar Property Manager with Michael Albaum