Should This Real Estate Investor Abandon His Market?

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Alrighty folks, one of the things I love to do Sunday morning is bring a new phase

with new stories. We are starting a series of portfolio reviews.

And this morning we've got Sid. How you doing, Sid?

Morning, Mike. Doing well. Thank you so much for inviting me. It's a pleasure.

Absolutely. Well, Sid, want you to do a favor? Let us know about what you're doing where you're

at today in this crazy world of real estate. And then we'll get into some questions.

So yeah, I've been following you for a long time. I think I found you 2020 during the pandemic,

when all of us were binge watching YouTube and Netflix. So you know, during that time,

I found you and I kind of connected with you because as a fellow W2 in Silicon Valley,

I'm like, like, this makes total sense. Like, and I've been on this journey. So just kind of,

like most of the folks I meet in your events is like, we find Dave Ramsey. We realize we're going

the wrong path. So let's fix our finances first. So I was on that journey 2019. And I was like,

let's get rid of the student loans, let's get the car loans, the credit cards. So around 2021,

I was dead free. And since I've been watching you, I'm like, okay, what's next? So that's when I

started looking into real estate. And just like you, I'm like, I need cash flow. I don't want to

work till I'm 65. And I found one of your old clips where you would like rage quit on your boss.

And you were like, I'm done. I don't need this. And I was like, I wish I was in that position. So

that was the inspiration that got me going. So again, just looking around started in Silicon Valley,

nothing cash flows, kept going west, kept going east. And then on bigger pockets, folks were like,

hey, Midwest is working. And I was that's long distance. And you were like, hey, try to stay

within the area. So I was like, let's drive. So I drove all the way to Las Vegas, but still nothing

kind of cash flow. I was like, all right, let's go to Indy. So why Indy? One of the reason was that

you kind of mentioned was, hey, you have to have some boots on the ground. So what the company I

work for, they have like an office in Indy. And I work with the folks over there. So that kind of

gave me the sense, okay, you know, I know somebody there. And I spoke to some of the folks I work with.

And they were like, hey, yeah, it's a decent market. And if you need, I will help more than happy to,

you know, help you out. So that kind of got the ball rolling. So 20, this is 2022.

Analysis paralysis now hits. I'm like, you know, it, you know, numbers guys. I'm like crunching

numbers and all this and 10% cash on cash return. You know, deals were kind of slim because they

interest rate at that point kind of went to 100%. So I was like, not down. So then 2023, my tax return

came in. I had enough down payment. I was like, you know what? This is the first one might not be a

home run, but let's go for it. So 2023, February is when I bought my first one. It was a single

family, 150,000 dollars expected rent was 1450. I got 1350, you know, but still it was cash flowing

like 150 dollars. And so I'm like, okay, this works. So I'm like, and since I was in that mindset

from Dave Ramsey that he lived below your beans, you know, rice and beans, I'm like, you know,

I love the punishment. Let's keep it going. So since you kind of gave like, and, you know, being

like, you know, very focused person, you gave, hey, get to four. I'm like, I already got one.

Let's get to four. And then we'll see because the first one's working. And that's why I think it's

very important not to get a home run the first one because if you have success on the first one,

and it's not a disaster, your tenants don't blow up your house and stuff like that,

that gives you the confidence and an internal momentum to, hey, let's, let's try another one.

So the second one was next year, again, saved all year long, waited for the tax return,

got like 100,000, you know, together. All right. So this is like, okay, let's go bigger this time.

So the next one, this wasn't like a pure, like a turnkey. This was like, it was on the MLS,

nobody bought it for three months. I went off the market and then I told my real, hey, let's put

it a low ball offer and they somehow accepted that. And then we negotiated the repairs and stuff.

So it bought it for two, 10, put in 40 grand in repairs and it rented for 2500. So

what was it listed before it went off? So it listed at 20, 260,000 dollars went all the way down to

220, I offered 180. Okay. Got it. Cool. All right. I like it. I like it. Follow-up discipline,

right in offers. You're doing all the work. That's great, Seth. Yeah. And then I'm like, okay,

this works. But then the construction part was a lot, you know, trying to manage from here,

but somehow my realtor was quite good and he became a property manager too. So I'm like, okay,

you know, just if the system's working, let's keep with the flow. And then

now we are 2025. Now people know me there. They know I can close deal. And then I went to your

event, found Jonathan, figured out DSCR loans. We stopped about it. He saw my portfolio. He's like,

yeah, I can do Indy. Just be over 125,000 dollars. I mean, make it happen. I'm like, okay,

I like doing bigger deals. That's more cashflow on my end. So last year, I got

like an off-market deal, two of houses, side-by-side, single-family, pretty decent,

purchase them for 160,000. They're renting for 1400. Almost a turnkey. Basically, it was a

trust deal where the grandfather built like a 20 portfolio and his grandchildren were like,

we're not interested in this. They were like selling. So that's how I found this one. So right now,

I have five units, four properties. And I'm at this point where, okay, I know this works.

It's picking out like around 7,000 in revenue or rent per month. And I'm netting if everything

goes right, I'm netting around $2,000. So I'm like, okay, this is working. So now in my mind,

I'm like, if I want to be Mike and retire soon at 45, then I need 5,000 minimum. And you know,

just two exit. So 10,000 is the goal now. So I'm at 2,000. 5,000 is the minimum I need to live on.

And 5,000, 10,000 is what I want to be at at this time. Yeah. Okay. I like it. So I have some thoughts,

but let's get to your questions first. Yeah. So the question is, as you have seen enough of us,

you know, going through this process, now it's the, you know, the starry eyes. I want to do this.

I want to do that. I want to accelerate. You know, I know everything. So I'm at that point and I'm

very happy that we have this opportunity to talk about it. So I've been from what I have learned

is it's always better to be in the market that you want to invest in because you get the better

deals. You can manage it yourself in long term. It makes sense. So with that thought process,

I've been looking at markets around and I found Phoenix to be possible. And I met, you know,

folks from Phoenix at your event. And what it would like, the only way you can make a single family

work there is through, you know, rent by a room of ads split. So that's one option. And then the

other ones is you go big as it's four legs to 10, 10, 10, like that, that's where you can make it

well because you no longer kind of working on the, the wants of a homeowner, you're working on

the NOI. So you can get the deal. So I was thinking, should I change markets, go down that route?

Or should I stick with Indy with, I like Indy, but I don't think I can live there snowing all. So

it's not my cup of tea. So that's that's why I was like, should, yeah, should I change and should

I change states, cities, strategy or should I continue with what I'm doing? That was the first

question for you. Yeah, so I think there's a couple of things. So first off, you're doing quite well,

right? You've got the proof of concept. You've done it a couple of times. You're on a pretty good

pace, buying one a year, which is awesome. So you're clearly living a disciplined life, which I

clearly approve of. But you are also only four years in to a 10 year journey, right? You're kind

of right at that midpoint where, you know, little trickle of cash flow turns into something more

meaningful, you know, like two grand, two grand, nothing to sneeze at. But you can never forget,

you need another six years, because what happens in six years? You know, that 2,000 bucks you have

today is probably going to be, I don't know, 4,500, even if you do nothing else, right? So part of the

answer for you getting to 10,000, which I'm going to guess just based on your question feels

far away. And again, remember, the three steps to getting wealthy, step three is it takes a decade.

So what I would tell you is, you know, looking at my personal time machine in 25 years of doing this,

is shit, you're halfway there. You should feel good about that, right? I know the numbers 2 grand

today, but you also have six years left to go. So I think you're, you know, you're on a pretty good

track. Second thing I think about is generally speaking, I don't like changing markets if your

market's working, because you have leverage, you've learned it, you're known. Also, Indian Phoenix

are vastly different, right? Phoenix is far more of an appreciation play than India's cash flow

play. And to jump from a cash flow market to an appreciation market, just because you're going to

live there, doesn't make a lot of sense. You're not, you're not, you started this conversation by

saying you wanted cash flow. So Phoenix is not that market, at least not today. And then the last

thing I would say is, you know, invest where the numbers work, but live where you want. You're

already doing it. India is already working for you. But I am a lot less concerned with out of state

investing today, given the technology and tools, assuming you have boots on the ground, and you

been there for four years, you have boots on the ground from your company. Now you have a property

manager that's working with you. You know, my, my, you know, knee jerk reaction is stop the shiny

objects and just double down what you're doing, right? If you spend the next five years and you get

only one more every five years, so you go from, I think you said five, five units to 10, maybe 12,

if some of them are duplexes or whatever, you're going to be really close to your goal, right?

Just give in time. So, you know, I know, I know you sit here today at two grand and you look at 10

grand and you're like, oh my god, I got to grow it 500%. Not really. Time's going to take care of

half that for you. That's my first thought. That totally makes sense. Yeah, because you're absolutely

right. I spoke to actually Lance when you, I was there at your event and he said the same thing

about Phoenix. I was like, yeah, Phoenix, you know, from what he's saying, rents are going down

six percent, prices are going down four percent, Indy and the Midwest around there, two percent

very boring, but steady as she goes. Yeah, yeah, yeah, I don't, you know, again, I, I see no reason

to stop what's already working in double down, right? And, you know, I think the other thing you're

going to be able to do at some point, it doesn't sound like you've done this yet. But at some point,

maybe at year six, you'll be able to go back and do a cash out refi on some of the early stuff,

which will take you from buying one a year to buying two a year. And then you go from having 10

units in 10 years to having 15 in 10 years. And then bingo, bingo, you're 10 grand. So, I,

I can kind of see your future as long as you keep doing what you're doing. I think you're a lot

closer than you think you are. I would tell you to put on the blinders and just double down on the,

because sometimes people get like, they like get bored. I'm like, dude, why are you bored making money?

I don't get it. Why do you want to go sit here? Like, if you go to Phoenix, you're going to sit your

hair on fire because not only is it new market, new price points, but also now you're talking about

a new business model co-living. You're really going to take a four bedroom house and turn it into

12 bedrooms or whatever they're doing. That just sounds like light my hair on fire. It's an entirely

different market. So just keep doing what you're doing. It seems to be working.

Yeah, totally because it's just a, I reached a point where you absolutely correct that, hey,

if you keep doing what you're doing, time will think, I didn't even think about that, that time is

on my side. It's not that I have to do everything. So correct. This was, this is just a light bulb moment

where you were like, hey, your 2000 in 10 years is going to be four. So I'm already half way there,

all I have to do is just buy four more and boom, I'm done. So that's fantastic. So then the other

question was, you gave me four, I followed four. So now, how should I think about it? Should I think

about, hey, get to 15,000 in revenue or in total rent? And then, then worry about the cash flow,

because right now my bio box says, be area, single family or duplex, earning me at least

250 to 200 cash flow, free cash flow, each one. So that's my bio box right now.

So what I would tell you to do if you got to four, which you did, I just continue at the same

mindset and I'm, excuse me, I changed the number to 10. I think if you go to, if you like four,

then the next number is 10. Okay. And that way it's still doable. It's not, it's not a crazy number

like a hundred. It's slightly, it's for you, it's double, right? You have five, so you're just

going to go to 10. And again, don't be in a rush. You're already proving you could do one of you.

I really think in a year or two, you will do two a year, because you'll go back to the first

property and do a cash out refi, take that extra capital and you buy an extra one. And that's where

this, that's where this wheel gets going really fast. So you're almost there. And one thing I was

kind of thinking was the cash flow was not touch the refi and stuff, just start paying it down.

Like at what point do you think that makes sense? Because I spoke to Dion and he was like, no,

just get more dead. Don't worry about being things out. I paid something and I had lost so much

money. I'm like, yeah, yeah, yeah. The worst financial decision he ever made was paid off of

property. And I told him, I told him that. That said, everybody's different. And you know,

like, how old are you today, Sid? I'm 41. All right. So let's just pretend for a minute,

Sid, you're my age, you're 50. Really, I'm 53, but I'm going to pretend to be 50. You have to ask

yourself, um, what's going to make you happy? Because the whole goal is to sleep like a baby

at night. So if you're 50 and for some reason, you still have a little Dave Ramsey in you,

I see no reason with playing with your equity. So for a moment, we'll say you have 10 properties

now. We'll just, we'll just pretend you have 10. You could go in and let ladder up debt on two of

them, peel out a hundred grand, and then you can take that hundred grand and slam it against

two other properties and make them debt free. Right? So you still have, so your equity position

stays the same, but you do have two free and clear just in case. Again, not everybody will do that,

but some people, some people just have to have, and I have some. I have a few that are free and

clear because I live through the GFC and I know things can go batshit crazy. So, you know, I have

a couple of properties that nobody can take. So again, that's really a self-owned thing. And I

know some landlords are like, damn, I'm never going to have any equity because I don't want to be,

you know, I don't want to have that. So it's really a dealer's choice, but you don't have to think

about that to another, you know, eight or nine years. Okay, awesome. And then I think one final

question was shifting the gold post, you know, like, you know, I met people who are like, hey,

I wanted to reach five grand. And now they're like, oh, I reach five grand, 10 grand. Like, like,

when, why, like, in your experience, like, when you reach your point, like, why did you not change

your gold post? Like, I'm just trying to, you know, get ahead, you know, just try mine sets.

I, I guess there's a couple of things. First, I mean, we just got to be real. I had no idea

how much money we were making. That's just the honest truth. My wife ran the books and I trusted

her explicitly. So I never looked. My job was to, you know, sell a lot of software and make a lot

of commission and then buy deals. I was very, very good at buying deals and it was a game to me.

And then, you know, one day she told me and I'm like, oh my god. So, you know, the answer is obviously

in 2018, I had that event at work and I left. And, you know, at some point, probably

three months in, maybe six months in, it dawned on me that this is okay. Like, I'm still saving

money and I'm living the best life. So I'm not going to pretend like I was perfect at this

because I wasn't. But, you know, nothing like a proof of concept, right? You go six months and

your savings goes up, not down and you're still, you know, you're doing whatever you want. That's

that's a really good feeling. But I guess the biggest thing that, you know, looking back eight years,

now it's already been eight years, crazy. God, eight years ago. That is wild.

Is there's a lot of gurus out there that keep changing the goalposts. You know, pace more,

be Ryan, Pineda, Graham, Stefan, all these guys who I talk with. And I just don't want their

life. I don't want to be them. I look at what they do and I'm like, I don't want that. Like,

I talked to Ryan the other day. The video came out yesterday. His life to get this, his life

cost 70 grand a month. Wow. I can't even imagine that. Like, that would, that would be like,

that's, that's 840 grand a year. Yeah. After taxes. That's wild. So I just don't want to be anybody else.

I, I guess I'm lucky in that I am 100% comfortable being me. And I don't, I don't suffer others. I

don't want, I don't have Indy. I don't, I don't want a Lamborghini. I don't want, you know, I don't

want to go to Maldives for a month or whatever it is. I have everything I want and more. So I

guess that's the biggest thing is I just got comfortable being me. Wow. No, that, that's I,

I guess that's a great self realization you have. I don't think I'm there. But from what I am

getting is feedback, I got to stay in Indy. Do what's working. Don't move the goalpost. I

guess I need a vision board or something to figure out my life. Yeah. Yeah. So that kind of,

you know, puts a pin in on the goalpost. And then final thing is, okay, I'm going to go for 10.

That's the plan now. So how do, how do we go to the fastest ways? I can say for one for sure.

But should I like start doing creative financing, seller financing? Because I haven't been doing

and you'll do it. Sit, sit, slow down, man. You're doing one a year. That is better than most.

Pat yourself on the back. Most people can't do that. It's okay to do one a year. And again,

what I think for you will be two a year is made like how much equity, like what was the first

purchase price? Did you say 150 or something? Yeah, 150 right now. It's a, it's like 200. It's

going up by 50,000. I have 100,000 or 100. Yeah. So for example, I mean, just for example,

you could take 40 K out of that property right now and buy another one. You might even be able to buy

two, but certainly going to buy one. So at some point, you're going to do exactly what Olivia and I

did is I went back to Norris Drive, took money out and bought two more. Then I went back to number two

and took equity out and bought two more. Then I went to number three and took money out and bought two

more. So what people don't realize is I had 40 grand when we started this and that was gone after

property three. I had no more money. I just used cash out refives from those three to get to eight.

And then we went to Bruce Norris and I sold those eight and I went to 80. I had no more money.

It was just moving equity around and then pivoting big time when the crash was coming. So again,

first off, don't be in a rush because the worst thing could do said is you could take on a sub two

or a seller financing or something. You don't know well and get in trouble and you can see your

empire collapse. There's nothing wrong with slow instead. If it's working, it's working. Don't be

in a rush. Don't don't try to shortcut it. You're in the you're in it. It's you're like right at

the top of the hill. Yeah. You go another year and then it gets easier. So don't don't jump off the

hill. No, this is really if I'm very happy that you know, you gave your time and we had this

conversation because I was about to get the shiny, you know, objects syndrome and go to Felix and

buy like a den you did. No, don't do that. No, I'm not going to happen. Thank you so much, Mike. This

was a lot of fun. Awesome. Sit. Thank you for coming. Thank you for saying yes and thank you

for helping so many other people. Have a great day. Have a good one. Bye.