Starting Over in a New City

WHAT IS SPECIAL ABOUT THIS BLOG?

I’ve been to a lot of real estate investing meetups and heard from a gazillion speakers. The good ones share meaningful knowledge and sometimes how they operate. I’ve struggled trying to emulate them because they do this full-time while I already have a demanding full-time job and do my investing during breaks, evenings, and weekends. Most investors I talk to have a goal to invest full-time. There is a knowledge gap on what to do to get there. I see evidence of this every time I go to a meetup and see people that have been attending for years and still have no rentals or investing income. This blog is designed for all of you part-time investors. Come join me in my journey!

A LITTLE ABOUT MYSELF

My name is Scott Hawley and I'm a part-time real estate investor. I work full-time in the tech industry where I travel about 20% of the time and can be paged at any moment. I'm married with an eight year-old daughter and spending time with her and my wife is a top priority. After having stepped away from investing many years ago, I picked it back up in early 2016 while living in Seattle. Over the next 2.5 years I had completed 7 rehabs of which 2 were done in a self-directed IRA, raised over $300,000 of private money, acquired 2 out-of-state rentals, and was a private lender with my self-directed IRA on 2 notes. In mid-2018 I paused investing to focus on finding a job in Kansas City which is where my wife and I grew up and where nearly all our family lives. With a then seven year-old, it was important to us that she grow up with strong family relationships which just wouldn't happen from our annual visit over Christmas. After a few months of interviewing, I got a job in Kansas City. We had a fun road-trip down, did Halloween in a small town while on the road, and I started my new job early November. Over the next 6-7 months, we bought a house, moved-in, my wife started a new job, my daughter was in 3 schools for 1st grade, I traveled about 40% for training events during my first 6 months, we got a dog, and had a few extended family emergencies. We took a week vacation over July 4th and then I jumped into investing again.

MY GOALS

My long-term goals are to achieve financial independence from cash flow rentals in multiple cities. I started rehabbing in 2016 to generate cash in order to buy rentals. I’m currently looking to deploy some of that capital in value-add rentals or the right turn-key rental in Kansas City or another cash flow market and to hold back some of the capital to start rehabbing again in January.

MORE DETAILS TO COME

I plan to share everything with you. You the reader will know me better than many of my friends, unless they are also following along. In this blog I will break-down the deals I’ve done, the lessons I’ve learned, what I did in Seattle, what I’ve done in Kansas city over the last couple of months, and anything else you want to know. What do you want to see first? What questions do you have? Just ask and I’ll prioritize that for my future blog articles.

JULY THROUGH TWO WEEKS AGO

I started out by joining Kansas City Facebook groups, finding all of the real-estate investing meetups, and starting to attend them. There are a lot here and my goal is to go to all of them and see which ones I think are the most valuable to attend regularly. Other than when I’m traveling for work, I’m attending an average of 2 meetups a week. My goals of these meetups are to network with other investors, find general contractors, property managers, investor friendly agents, and wholesalers. I’m getting on their buyer’s lists and setting up a deal funnel. The goal of the deal funnel is to have as many deals landing in my inbox as possible. I had also made some connections while in Seattle for out-of-state investing and get deals in email for some other cash flow markets. In mid-July I acquired my third rental which is out-of-state near the other two. In September I setup a Solo 401k, rolled over my IRA and my wife's IRA, in order to invest in a syndication.

THE LAST TWO WEEKS

Everything up until now has been pretty high level. That’s because you’re only going to read so much, but I will expand on those areas in future articles. I want to get very detailed now so you can see exactly where I’m spending time.

With the deal funnel active, what do I do with the flood of emails? I already have the 1% rule to weed out properties, but when you are focused on cash-flow markets, they are almost all 1% or better. I created an excel spreadsheet to quickly analyze the deals. You could also use the Bigger Pockets calculator, but I personally prefer my spreadsheet. It has the same inputs and I have the results of either buying it with a loan when there is little to no rehab, or buying it with a rehab loan, fixing it up, and then refinancing it. I also include some expenses that I don’t often see like the cost to create an entity and seed money for the checking account for this investment. The important step here is to analyze all the deals! I don’t go to bed at night until I have analyzed all of the deals in my inbox.

With all of that deal analyzing, a few properties stood out. One is an off-market 8-unit value add property in Kansas City. I’m pretty excited about this property! I first became aware of it on Saturday 9/28, nurtured the relationship, and got the address on Wednesday 10/9. Since then I’ve done lots of online due diligence, found a good title/escrow company who provided me with a purchase and sale agreement, and met the seller on Friday 10/11 where I toured 3 units of the property. I contacted close to 15 lender’s between Friday and today. Some I already knew about and some I got by asking for referrals from Facebook groups. Only 1 of them may work because the others either only do residential or they have loan minimums which this is under. I’ve learned that local banks are fine with lower loan values and I’ll be calling several local banks on Tuesday since Monday is a bank holiday. I plan to make an offer in a few days.

I spent the weekend of October 5th in Nashville networking with several other investors while meeting a local team of people like real estate agents, property managers, general contractors, and lenders. While Nashville is expensive, some of the suburbs are good cash-flow markets. This is part of my deal funnel and a multi-family value add property also stood out when I analyzed it. I spent a few days last week collecting more information on it and finding a lender for it. I’ll get a quote on the rehab loan and long term refi on Monday or Tuesday this week, update my spreadsheet to finish analyzing it, and most likely make an offer on it.

Some of the deals I see require more cash than I have available. One 24-unit stood out but it needs 240-250k to purchase. I’ve reached out to a couple of friends that have previously expressed an interest in investing to see if they want to partner on this.

I went to one meetup, not including the Nashville trip, where I met someone that I may lend to. After investing in the syndication, I still have some leftover IRA money that I need to put to work. I've traded several emails with him and am evaluating whether I'll lend to him or keep looking for something to do with it.

My work in September to setup the 401k was finalized and in early October I wired the money to the syndication. The syndication will close on the property in early November.

That’s a lot now that I see it written down, but my personal life wasn’t sacrificed either! The weekend before my Nashville trip we celebrated my daughter Kahlan’s 8th birthday at Chuck E. Cheese, Tuesday we had our annual special breakfast on her actual birthday, yesterday Kahlan and I went to a Nature Center followed by lunch with my brother and a friend (my wife was holding an open house), and today we all went to the Kansas City Renaissance Festival. I spent time playing Minecraft with Kahlan, reading her stories, snuggling and watching TV, and playing Magic Arena.

THE KEY TAKE-A-WAY

The key part of the last two weeks was analyzing deals daily. Your deal funnel will grow as you continue to network, but it is critical to analyze the deals. This will give you the ability to recognize a real deal and the confidence to take action on it.

WHAT’S NEXT

This next week there are 3 meetups of which I plan to attend at least two, I’ll find a lender for the 8-unit, and make offers on both properties. I need to setup a website for this blog, setup a process for tracking my miles and investing budget, and catching up on the accounting for my 3 rentals. There are plenty of other things to do but these are at the top of my prioritized list.

Thank you for reading my first blog post. I plan to do this weekly and welcome your feedback.