Trading W-2 for Self Management- 0-92 Units in 16 months!

Trading W-2 for Self Management- 0-92 Units in 16 months!

Rental Property Investor · Papillion, NE · Member since 2017 · 398 posts · 1k+ votes

I hope to provide an informative account of how I was able to scale to 92 units in 16 months, leave my W-2 job and truly find my passion.

Back Story:

I am 33 years old, I am married with two young (1 and 3) children. My career before REI was as an IT project manager at an insurance company. I currently own 92 multi-family rental units in Omaha Nebraska, mostly with partners and self-manage. The portfolio consists of properties ranging in size from duplexes up to a 24 unit building.

Financing: I received my initial capital through a HELOC on my primary residence. All my properties are traditionally financed with 20-30% down on 15-25 year AMs that balloon between 5-10 years. I have also used hard money and private lenders as well.

What Started my obsession with REI:

I, like many of the individuals on BP was frustrated with the lack of freedom as well as minimal feeling of accomplishments through my 9-5 job. I had always known I wanted to do something entrepreneurial but had no idea what direction to proceed.

Before I go much further I want to highlight some of the effects of beginning your investing career:

  • 1.People will doubt you and think you are crazy. They will say Real Estate is risky, they will say you have a great job, they will ask are you worried about plunging toilets at midnight. Be respectful to these people but do not internalize their words. Soon enough they will see your success and want to emulate your actions.
  • 2.You will have to sacrifice a lot of your fun time. No more lazy Sundays or lunches with your complaining coworkers.. you have work to do.
  • 3.Your sacrifices will affect your family, you will be on your phone more, likely you will now be working your full-time job and investing “job”. This is the harsh reality (at least for me) to get where you want to be. It is vital to surround yourself with a strong support system.
  • 4.You will become very aware of your goals and that most individuals do not have goals further than next week. This is ok, focus on yourself but give conscious effort to help others.

January 1st 2017: off of friends recommendation I picked up “Rich Dad Poor Dad”. I finished the book within two days and immediately realized my idea of wealth building was completely backwards.

In 2017 I had zero debt, a good job and was leveraging my 401k… I have traded that philosophy to acquire large amounts of debt, no 401k or IRA contributions and now have the freedom to control my own financial destiny.

Below are the steps I took to remove myself from my W-2 (and 30 years of working for someone else) and obtain a career as a real estate investor:

Step 1 (Education): Read and listen to as many books and podcasts as possible. Below are the books I have read and/or listened to (real estate and business):

This is the most important step in your journey, you must be constantly educating yourself! If you don’t like to read, listen or educate yourself than unfortunately you will likely not find much success (although I am sure there are those out there that have succeeded without).

Rich Dad Poor Dad, Millionaire Real Estate Investor, Multi- Family Millions (Dave Lindahl), ABC’s of Real Estate Investing, The Book on Rental Property Investing, Hold, The Advanced Guide to Real Estate Investing, The Due Diligence Handbook for Commercial Real Estate, Millionaire Real Estate Agent, The Book on Managing Rental Properties (Brandon Turner), The Emyth Revistited

Crushing It in Apartments and Commercial Real Estate, Emerging Real Estate Markets ,The ABC’s of Property Management, Wheelbarrow Profits, The One Thing, Outliers, Start with Why, David and Goliath, Chasing Excellence, Extreme Ownership, The Compound Effect, The Entrepreneur Roller Coaster, Be Obsessed or Be Average, The 10x Rule, The Obstacle is the Way, Ego is the Enemy, Am I Being Too Subtle, 48 Laws of Power, Atlas Shrugged, Man’s Search For Meaning, Sapiens, Tools of Titans, Four Hour Work Week.

Step 2 (financing): To get a better idea of what I was capable of purchasing, I met with four different lenders and began a relationship to acquire funding. I decided to open a HELOC on my primary residence, this allowed me to have access to capital if I came across an available deal.

***How did I choose the lenders? I choose a larger bank (better rates), two local banks (less restrictions, and one in which I already banked.

Step 3 (network with everyone): During my lunch breaks at work and in between changing diapers I would call/text anyone I knew or didn’t know to discuss real estate. Friends, brokers, lenders, attorneys. Anyone who either had a relationship to investing or was a person I looked up to based on their successes.

Find everyone in your network that is smarter than you and begin networking and explaining your goals. They likely know other smart people and those smart people will know someone who invests in real estate (Because smart people invest in real estate… just like A=B B=C A=C)!

*****I can't underscore how important networking is, I was able to link up with an experienced first partner who helped (and still helps) guide me through REI.

Step 4 (analyze deals and market): Analyzing multiple deals everyday as well as market rents for the areas I was targeting. I regularly searched through Zillow, realtor.com, Loopnet and Trulia. I used these sites to find properties for sale, current rents, as and look over previously sold properties.

Step 5 (leads): Immediately I realized that going about finding a deal through Zillow was nearly impossible and that brokers are not incredibly willing to spend time handing off deals to a newbie. So…. What did I do?

  • 1.Started posting on Biggerpockets (I received my first deal through a BP real estate agent)!
  • 2.Downloaded a list of multi family owners from Listsource.com
  • 3.After receiving the list I searched for phone numbers and began looking up every property (assessors website and Zillow) and becoming familiar with the neighborhoods. I would also walk the neighborhoods and properties over my lunch break and on my drive to and from work. (this is before I made a call or sent out any letters).
  • 4.Once I had a decent understanding of my criteria I began hand writing letters (191 to be exact) and calling the phone numbers I was able to gather online.
  • *****This was the catalyst to me finding deals and launching my career***** I was able to do six deals from that initial list.

Step 6 (start networking group): After attending the local REIA a few times and receiving a lot of value I realized that starting another group would bring at least twice the value. With the help of my partner I began a networking group which now in less than a year has over 200 members and regular attendance of 40+ individuals a meeting.

Property Management:

When I initially began learning about the power of real estate and passive income I assumed I would also be a passive investor and reap the benefits of financial freedom. Quickly I realized that if I were to take the passive approach my goals of quitting my W-2 would be extremely delayed (also I would be putting my life savings into another person’s hands). I realized that property management, although a job in itself, would allow me to control my career and financial freedom.

Caveat: Property management is Very demanding. Do NOT manage your own properties if:

  • 1.You are not a people person.
  • 2.You do not like talking on the phone.
  • 3.You dislike working weekends (or any hour of the day outside of 9-5).
  • 4.You do not want a second job. This is NOT passive, it requires you to create systems and deal with all the complexities that a business entails.

Reasons to manage your own properties:

  • 1.You are an effective manager and for the most part enjoy people.
  • 2.You want to reduce vacancy and expenses (after the property has been repaired my vacancy rate is below 2%).
  • 3.You want to start your own business and instill a certain “culture” at your properties. I focus heavily on customer service, I am not a pushover but try to go above and beyond as far as customer satisfaction.
  • 4.It keeps you very in tune with your investments, which may be the key to your success.

Thanks for reading and if you would like to talk please reach out through BP or any other channels! I would love to connect with more individuals and discuss Real Estate!

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Most Popular Reply

Investor · Omaha, NE · Member since 2016 · 33 posts · 26 votes
8y

@Collin Schwartz forgot one large detail that has been taking up a good portion of his time the last year and a half - giving back!  Thanks for being a mentor, for always being open to provide advice, and for starting up and managing the meetup.  Appreciate it buddy!

See this reply in the discussion

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  • Rental Property Investor · Newport Beach, CA · Member since 2018 · 34 posts · 15 votes
    8y

    This is an amazing story! Im currently in the first phases of your journey (saving, learning and analyzing) but i really appreciate the note about effects at the beginning of your career. Keep up the good work!

  • Rental Property Investor · Austin, TX · Member since 2018 · 98 posts · 39 votes
    8y
    @Collin Schwartz Beautiful! So encouraging! I’ve now gotten my wife excited about REI and we’re taking action. Financing seems to be the biggest obstacle so far, but we’ll plough through it and find a way.
  • Naples, FL · Member since 2018 · 3 posts · 0 votes
    8y
    @Collin Schwartz. Awesome Collin! Thanks for the real world information and further proof that “it can be done”.
  • Member since 2018 · 2 posts · 0 votes
    8y

    Thanks for sharing, I appreciate the effort you put in to share the information.  Very lucid and detailed.

  • Investor · San Diego · Member since 2018 · 2 posts · 0 votes
    8y

    @Collin Schwartz  Thanks for sharing in so much detail.  Love seeing people win!  Curious about your response rate on the 191 letters.  Did most of your 6 deals from the list require you to do outbound calls to start a conversation?

  • Rental Property Investor · Tyler, TX · Member since 2018 · 4 posts · 0 votes
    8y

    Great read Collin.  Glad it's working well for you.  Great books too....I have read most but just bought a couple of them that you recommended.  Keep crushing it man.  Take care.

  • Member since 2018 · 8 posts · 3 votes
    8y

    @Collin Schwartz Congrats on such a quick and seemingly success transition into the REI world. One quick insurance tip for you in NE.. be mindful of the wind deductible that you agree to in your property policies. While you can save huge dollars by increasing the deductible just a single percent, the downside can lead to catastrophic cash shortfalls in the event of a loss. I would suggest keeping making the deductible equal an amount that you could survive, but it would "hurt". That way you keep as much money in your pocket as possible while not facing enterprise risk. Glad to discuss this further with you if you would like.

  • Rental Property Investor · Papillion, NE · Member since 2017 · 398 posts · 1k+ votes
    8y

    @Alan Lewis one was from outbound calling the four were inbound calls and one was a referral. I still receive calls from the first list I sent out. 

  • Member since 2018 · 1 post · 0 votes
    8y

    Great work and thanks for sharing! I'm in the middle of a rehab on a duplex for our first property and we will be closing on a second (single family) soon... both in Omaha. 

    Do you also use 5 - 10 yr balloons on properties w/ fewer than 4 units? If so do you have concerns in today's rising rate environment? Do your balloons have caps? We will be refinancing from our construction loan to permanent soon so would welcome your thoughts on the lower rate today VS the security of long term fixed.

    I just saw that you have a local RE Meetup this evening. Can't make it on short notice but look forward to attending one in the future!

  • Real Estate Broker · Santa Monica, CA · Member since 2018 · 1 post · 0 votes
    8y

    Thanks so much for sharing your story.  I want to be doing exactly what you've accomplished. I think I checked off all the boxes you've mentioned in your article with the exception of networking.  I am working to build that up along with knowledge. I'd love to chat to understand what you did with the resources you found on listsource.com.  

  • Tracy, CA · Member since 2018 · 38 posts · 10 votes
    8y

    So far we have purchased 91 doors, but has taken us much longer.  Thanks for helping to provide a roadmap to accelerate our growth.  I'd be interested in chatting at some point.  

  • New to Real Estate · MELISSA, TX · Member since 2018 · 32 posts · 6 votes
    8y
    Thank you for the share, I am around your age and ready to leave my W-2. Your inspired me to failing forward.
  • Centennial, CO · Member since 2018 · 38 posts · 3 votes
    8y
    @Collin Schwartz thanks for your kind sharing. These are invaluable knowledge. Could you share a bit more how you choose your properties (like what kind of neighbourhood, year, xbedsx bath,etc) and what cash on cash return you usually look at? How do you usually deal with the bargain with owners? Thanks!
  • Investor · Stamford, CT · Member since 2015 · 31 posts · 6 votes
    8y

    Great post Collin, lots of info! I would love to connect with you and discuss so of what has worked for you a bit further.

    I look forward to hearing from you!

  • Member since 2011 · 7 posts · 1 vote
    8y
    @Collin Schwartz Thank you for taking time to detail your journey to 92 Units. Thank you also for the book recommendation.
  • Real Estate Agent · Marlton, NJ · Member since 2017 · 2 posts · 2 votes
    8y

    Absolutely awesome article.  I am an agent and investor and purchased 2 suplexes in my first year.  You did 92 units! amazing.

  • Member since 2018 · 46 posts · 43 votes
    8y
    @Collin Schwartz Great summary. Very helpful. Thanks.
  • Real Estate Broker · Omaha, NE · Member since 2016 · 44 posts · 22 votes
    8y

    How am I just now coming across this!?

    It's really been an honor to see Collin grow and be as involved as he is in our market in Omaha, NE. On all fronts he came into this with the motivation to change his lifestyle, and I'll tell you that most people who meet him in person will say it that it shows. I think we've especially bonded because not only was it one of his first purchases, but also one of my earlier representations as a facilitator of multifamily investments! 

    @Collin Schwartz 

    @Stephen Sykes

    Collin & Stephen, I'm so grateful to have the pleasure of our interactions! Every time we come across each other, whether its a question with a situation or property, or through sending each other deals - it still gets me excited to hear both your perspectives and thoughts. 

    I know I'm not always the first to send you properties that become available on the open market (Collin is a networking beast), but you two are almost always my first calls when I come across a good off-market deal. 

    These guys are great!

    P.S. Sorry I missed the meet up tonight, you know I have my little one on Wednesdays ;] 

  • Real Estate Agent · Beverly Hills, CA · Member since 2017 · 2 posts · 2 votes
    8y

    Thanks for sharing!

  • Frisco, TX · Member since 2011 · 17 posts · 5 votes
    8y

    Such an inspiration to hear your story. Thank you for sharing. Please provide updates in a year to share your continuing story. 

  • Real Estate Agent · Goleta, CA · Member since 2017 · 73 posts · 92 votes
    8y

    Your post stoked my FIAH!!! Thank you...i really needed this

  • Member since 2018 · 1 post · 0 votes
    8y
    @ShaVarr Brown Hi ShaVarr, I'm new and very curious on how you were able to finance these units? I know you put 20 to 30% downpayment but you'll run out of money or bank wont lend you money during to debt ratio. Would you mind sharing your success with me? Greatly appreciated if you reply back. Thanks, Jack
  • Port Jervis, NY · Member since 2017 · 9 posts · 6 votes
    8y

    Amazing story.  Wish you more success in your journey.

  • Rental Property Investor · Papillion, NE · Member since 2017 · 398 posts · 1k+ votes
    8y

    @John-Michael Rachinsky-Wood thank you sir! Sounds great we can setup a time next week to talk. Feel free to msg me to set something up.

  • Rental Property Investor · Papillion, NE · Member since 2017 · 398 posts · 1k+ votes
    8y

    @Arturo Colmenero congrats on your success! Lets try and setup a call soon. pls Pm me.

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