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!

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  • Stamford, CT · Member since 2017 · 17 posts · 9 votes
    8y

    Awesome job! A lot of what you said sounds similar to my situation.  Do you mind sharing what criteria you look for and a gist of what your hand written letter said? 

    Congrats on your success.....where do you go from here?

  • Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    8y

    Awesome story and great information!   Did you really read Atlas Shrugged during all this?  It's like 700pgs!

    Love the hustle and that you self-manage.   A dying breed we are in this day of working 'on'your business.  Yeah, keep working ON that while youre stuck IN your cubicle to pay everbody. LOL  Well done!

  • Investor · Post Falls, ID · Member since 2018 · 20 posts · 16 votes
    8y
    @Collin Schwartz Thank you for posting! So encouraging and inspiring! My husband and I decided we were going to self manage and as a result are now ditching the W2 and starting our own management company. I LOVE your book list! I am very excited to add a few of these to my list! After just 16 months! I am excited to see where you are in 10 years!
  • Jerry W.Pro Member
    Moderator
    Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
    8y

    @Collin Schwartz, I love your story and thanks for taking the time to share it.  I have been starting to struggle with managing only half of my units.  With a full time job even 15 units gets tough between collecting rent keeping repairs up, preventative maintenance, looking for new deals, managing refinances, etc.  You must have good systems.  Would love to talk to you on how you set them up sometime.  Keep going, and best of luck.

  • Member since 2018 · 29 posts · 27 votes
    8y

    Very inspirational, thank you for sharing your story! I am under contract with my first multi unit and hope to be in a position similar to yours one day.

  • Flipper/Rehabber · Las Vegas, NV · Member since 2018 · 1 post · 0 votes
    8y
    @Collin Schwartz. Love this inspiring post! I’m a newbie, just purchased my first tenant occupied home. Looking at a 4plex now. The 48 laws of power is my bible.......
  • Rental Property Investor · Papillion, NE · Member since 2017 · 398 posts · 1k+ votes
    8y
    David S. At about 30 units I added a bookkeeper, this was because it was the least enjoyable part of my REI. I also knew I was going to start growing rapidly. I have a crew of a part time handyman, cleaning/painting crew who is helping in areas such as basic PM and contractors for general rehab. All individuals are contractors as they work for other individuals as well. I make sure that I try not to spend time moving appliances or changing locks. Typically I am the one who is “customer facing” meaning I take all the calls but often distribute them to the team.
  • Rental Property Investor · Mesa, AZ · Member since 2018 · 17 posts · 12 votes
    8y
    @Collin Schwartz thank you for your post. We are new to real estate (1 rental) and are gearing up to get into the game in Spring. We are also reading the same books and listening to podcasts every day. Thank you for your advice and best wishes for your continued success!
  • Rental Property Investor · Papillion, NE · Member since 2017 · 398 posts · 1k+ votes
    8y

    @Patrick Rigg @Jeremy Harper thanks for the kind words!

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

    @Joshua Levine my criteria is fairly simple. Location is key, there must be paths of progress in and around the buildings which will hopefully allow the property to stay desirable for renters. Also a clear path to a 20% value add within 3-6 months is vital. I must be able to increase NOI by 20% either through reduced expenses or increased rents. Feel free to msg me and I can send you a copy of the letter.

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

    @Steve Vaughan Atlas Shrugged was definitely an Audible "read"... 66 hours or so. I typically read my real estate books and listen to the business/motivational books. Obviously being a landlord is not the end goal but I will say I enjoy the heck out of it for now! Just like retail/customer service I think everyone in real estate should experience managing their own properties at least once. 

  • Anthony GaydenPro Member
    Rental Property Investor · Omaha, NE · Member since 2014 · 2k+ posts · 3k+ votes
    8y

    @Collin Schwartz

    You are a cool guy for putting on all of the Omaha meetups and you have done a great job in a very short period of time.

    I met you at one of your meetups last year, but work, family, and my investment properties have kept me too busy to attend recently. 

  • Rental Property Investor · Culver City, CA · Member since 2015 · 3 posts · 4 votes
    8y
    @Collin Schwartz Great read Colin, Cheers!
  • Rental Property Investor · Austin, TX · Member since 2016 · 294 posts · 104 votes
    8y
    @Collin Schwartz the number of properties is certainly great. But where are you now? What is your annual income from them?
  • Rental Property Investor · South shore, MA · Member since 2017 · 1k+ posts · 1k+ votes
    8y

    Thanks for sharing @Collin Schwartz congrats to your ongoing success!

    I have a couple questions since I am just starting out, and I am often experiencing some of the things you mentioned. I have a W2 job, that takes up 80% of my time. But I spend every minute I can on my investing "job". At first people thought I was an idiot for buying the house that I bought, "why would you buy this, this is a stupid decision", turns out it was a great deal because I was willing to put in the hard work. I took out a HELOC on that house and bought a duplex, again certain people tried to discourage me, telling me It wasn't a good deal yada yada. Im just about finished on that project, and will refinance in a few months, and ill be looking at a 55k cash out refinance. The thing that bothers me the most, is I am constantly trying to explain why I do the things I do to people who just don't have my vision.

    How did you handle scenarios like this? What gave you the ability to enjoy what you were doing despite the noise? I spend a lot of time listening to audiobooks, and a lot of those books are actually more geared towards the mind and being positive (you mentioned mans search for meaning, I just finished that). I want to grow financially, but continue to be happy and enjoy RE because it has become a passion of mine. 

  • Developer · Santa Monica, CA · Member since 2018 · 46 posts · 58 votes
    8y
    @Collin Schwartz this is so inspiring! Thank you for listing the steps you took, it’s really helpful to see and read the steps it takes to acquire such freedom, given there is diligent work involved. Thank you for sharing Collin!
  • Real Estate Agent · Malaysia · Member since 2015 · 56 posts · 22 votes
    8y

    @Collin Schwartz thx for sharing your experience. From the list of the books that you'd read, it seems that you are focused towards your goal. Unlike you, I've read multiple self development books but different fields. Guess it's time to FOCUS!

  • Brian WashburnPro Member
    Rental Property Investor · Omaha, NE · Member since 2017 · 43 posts · 35 votes
    8y

    @Collin Schwartz you got me all fired up on this cold Monday morning! Very inspiring. I haven't been able to make it to a meetup for the past several months, but hope to be there this Wednesday. 

  • Lender · Newark, NJ · Member since 2016 · 695 posts · 252 votes
    8y

    Thank you for taking your time and creating this well put together thread. These are the exact steps I found which I needed to get focus into REI. I love your journey and quick turn around time to go all in. If i'm ever in the NE area I will sure to reach out to further pick your brain. I'm looking into out of state investing but have not picked a market yet. You should create a blog as you provided some great information here. Best of luck and hope to connect soon.

  • Member since 2018 · 5 posts · 0 votes
    8y

    Amazing story indeed!, i went through your book list. Other than understand capitalism, would love to how Atlas Shrugged helped you?

  • Member since 2018 · 17 posts · 7 votes
    8y

    I am a newbie.  I was able to get one flip under my belt this year.  I am hungry for more.  Since I work in a jail, I'm looking for the get out of jail card.  

    Thank you for the information and encouragement.

  • Rental Property Investor · Dallas, TX · Member since 2018 · 12 posts · 6 votes
    8y

    @Collin Schwartz thank you for sharing your journey in such great detail!  I'm interested in hearing more as well as getting a peek at your hand written letters if you're willing to share.  I'll PM you.

  • Specialist · Louisville, KY · Member since 2017 · 166 posts · 154 votes
    8y
    @Collin Schwartz That’s amazing. Just amazing. Congrats!
  • Brooklyn, NY · Member since 2018 · 10 posts · 3 votes
    8y
    @Collin Schwartz amazing post. Congrats on all your success and wish you many more. Thank you for sharing!
  • Investor · Charlotte, NC · Member since 2017 · 791 posts · 479 votes
    8y

    @Collin Schwartz congrats! incredible success in a short period of time

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