Old Inactive Member Back At It and Re-Introducing Myself

[Keith Schulz]

Hello Bigger Pockets Members,

I’m re-introducing myself because I’ve been inactive on Bigger Pockets for quite awhile time. I’m a real estate investor and broker from Madison, WI (currently live in Verona, WI). I bought my first duplex 17 years ago at 23 years old, and I lived in half of it for a couple years. In the years to follow I bought several other rentals and found myself highly leveraged going into the 2008 down turn with a boat load of debt. At that point, I actually became an agent and sold off several properties. I weathered the down turn mostly unscathed, but after watching a couple friends go bankrupt using similar strategies, I completely changed my perspective. I’ve gone Dave Ramsey style, debt free, and I’m sitting on a little over a half million in paid for real estate. I now own a small 5 agent real estate brokerage (Great Rock Realty). I recently just sold a flip property that I partnered with a friend to buy at foreclosure auction, and now I’m ready to buy more.

Also, I’m curious how many others out there are doing a conservative or all cash investing strategy. It seems like most investors are going the heavily financed route. I understand there’s better cash on cash returns with leverage. However, life is very comfortable and stress free debt free! 

I'll try to start paying attention to these forums again and hopefully I'll make it to a local meetup sometime soon. 

Thanks,
Keith

[Joe Scaparra]

Just a couple of thoughts for everyone.  Dave Ramsey is good for about 90 to 95% of the people out there.  That is because those people were living for today and not concerning themselves about tomorrow.  Living paycheck to paycheck, racking up debt is just about 90% of people do and for those people Dave Ramsey's message is spot on.  

However, I want to talk to the 5% of the people who are discipline and can find a way to save each month NO MATTER HOW MUCH THEY MAKE.  You see those people are the right ones who can use leverage to their advantage.  There are many ways to make money in real estate.  Some strategies are more risky than others, some are more flashy and make better cocktail party talk and then there are some tried and true, boring ways to build real wealth with real estate.  

I like the tried and true but very boring especially when talking investments at a cocktail party and the loud mouth guy brags how his stock doubled in a month.  

I love my real estate now and I love my real estate in a downturn.  During the downturn my real estate is ROCK SOLID and in an upturn my real estate soars!   Boy you got to love that.  But my real estate does not double in a month or even a year!

Here is some food for thought.  The U.S. is 320 million strong and the population growth rate is 1%.  Which means our population in the U. S is growing at about 3.2million more people each YEAR.  We are growing 3 Dallas's a year or 6 Denver's a year or just short of one Los Angeles EACH YEAR.  So those locals where the population is growing the fastest will have increase demand for housing and therefore probably the best places to invest.  

I am spoiled, as I live in Texas and better yet Austin, TX.  Texas is number 1 state growing in population and Dallas, Austin, San Antonio are among the top cities increasing in population.  So as a boring real estate investor, I stay in the market with rents generally $1000 and below.  I also buy exclusively duplexes or 4 plexes.  That income level is getting squeezed out of the market and they are finding themselves having to move out of the cities to afford rent.  During the down turn the $1000 rents or below will stay rock steady or go slightly up as demand will increase in that economic level.  Currently if I put a sign in the yard for rent, I have to take it down in three days or less as I get too many inquiries.  

For the 5% of the population who are discipline, they won't get in financial trouble due to there multi-family real estate.  Why, because they will have kept there properties in good shape and will have no problem staying cash flow positive, at least here in Texas.  Here in Texas, I buy property 20 cent on the dollar (20% downpayment) and NEVER use another dollar of my own money to pay taxes, insurance, mortgage or repairs.  I keep my real estate holdings separate from my personal living expenses.  I get 30 year loans, save profits 1st year to pay maintenance and then pay down mortgage years 2-10 and usually within 12 years I out right own the property.  So I like using leverage all day long, Dave Ramsey advice doesn't work for me, I want to be wealthy not comfortable.