I had almost no idea what I was doing during my first real estate investing experiment.
Worse, I didn’t know how little I knew at the time. If I did, I may not have dived in as quickly as I did. And for that, I’m grateful.
After some cosmetic renovations, I moved into my unit in an owner-occupied triplex. Immediately some maintenance requests came up. And questions about paying rent. Oh, and one unit’s lease was coming to an end in a couple of months… how would I find a lease!?
I thought the hard part of real estate investing was behind me. Turns out, managing a rental property is a whole other skill set. And I had barely scratched the surface.
So, mistakes were made.
I looked for sample leases online and modified one to use for my tenant’s renewal. Scrambled to find free online property management software that allowed online payments. Found a cheap handyman without vetting and quickly took care of immediate repairs.
Not bad for a new landlord, right?
Except that lease I found online had tons of holes in it! On the recommendation of my real estate agent and investing mentors, I later joined the local chapter of the National Apartment Association and started using their leases and forms, which are regularly reviewed by their legal team and used statewide. I also took advantage of another benefit of the NAA – local classes on property management.
That property management software I found online was horrible, and both residents dropped it almost immediately. Instead, they would call or email me with any questions. Not horrible, but I found myself using several applications just to manage this one property. Easy with just two units, but not scalable if I decided to invest in more rental properties. So I took several weeks to research various property management software and found a much more robust solution. Not an enterprise solution, but something that would work for at least 50 units, and it was reasonably priced.
A few months after my residents rejected the first online portal, they gave the next one a try. It took a bit of coaching, but eventually all communications, maintenance requests, and payments were done through the portal. Which made life much easier for me. One place to track all transactions. And it had an app that I could track from my mobile devices.
Oh, and those maintenance requests I knocked out in the first month with a cheap handyman? Almost all of those issues resurfaced later. This time, I asked my network for recommendations in different trades. I took the time to get quotes and vet different vendors, building relationships with good crews that charged a fair price.
It took a little over six months, but eventually I found my landlord groove. My real estate investing experiment was a success.
Juggling that and work was a lot. Honestly it should have wiped me out. Instead I was energized! I spent most of my evenings and lunch breaks improving my skills during those first six months. I even used PTO to take several classes from the local Apartment Association. These built up my knowledge and confidence in leasing, fair housing, legal issues, marketing, etc.
So when I received a windfall from work in the form of vested stocks (some of the few that were not underwater), I knew exactly what to do.
I looked for the next investment property.
I had a lot more confidence in my real estate investing analysis skills, as well as my property management skills. And a couple of months into my search, I found and bought a pure investment duplex with a 25% down loan. That down payment was tough, and almost wiped me out. But the ROI I calculated after bringing rents up to market value within the first year would be worth it.
Once the dust settled on that second property, I took another deep look at finances.
Honestly, even though I brought down my expenses and drove up my savings, I was not actively watching these on a monthly basis. Just kept an eye on accounts to make sure nothing was going red. And it wasn’t.
But I wanted to treat my personal finances with the same discipline and professionalism I brought to real estate investing, property management, and my job.
One weekend I did some research and downloaded a free budgeting application that would aggregate all of my accounts. I could create budgets and categorize expenses in one place. Even separate my “investment” expenses with tags so I could track those separately. As anyone in IT can attest, the data migration was hell. Categorizing historical transactions is not a happy place. But the results were worth it.
And the results were shocking.
I thought I made a mistake. After triple checking my income and expenses, I could confirm. Since I moved into the owner-occupied triplex and further reined in my expenses, I had just over a 70% savings rate.
Turns out, investing in real estate was a hell of a savings motivator for me.
Living in the owner occupied triplex really put me over the edge savings-wise. The income for the other two units now covered the entire mortgage. My expenses for the property came down to shared water, landscaping and repairs. Averaging out the past six months, my expense was about $250 a month.
Looking at the second duplex investment property I purchased, the duplex’s rental income covered the mortgage, the shared water and repairs. And still profited about $200 a month.
The cash flow from the duplex almost covered the extra expenses on the triplex!
This might not sound impressive, but now let’s visit my personal expenses. Since I did not have “rent,” they were minimal. My personal utilities for electricity and internet, groceries, shopping, gas, and some miscellaneous expenses came out to about $1000 a month.
That was way down from my expenses a year ago!
And… drum roll please…
I wanted to move into another owner-occupied property. Doing this would allow me to rent out the unit in the triplex I was currently staying in, giving me more profit for the triplex. If I got into an owner-occupied property with operating income and expenses similar to the triplex I was in now, the profit from the extra unit would be just that, pure profit.
Guess how much that unit would rent for? Exactly $1000 a month.
This is what many investors dream of, getting to a stage of financial independence where your passive income can cover all of your expenses. My dedication to saving was renewed. I had an amazing goal… and just in time.
The climate at work was getting worse by the day.
Despite having a “second job” as a real estate investor and property manager, I was still excelling at my corporate job. I even got another promotion. And a ridiculous amount of extra responsibility. Not in that order, of course. My initial team of five turned into two teams of eleven, then five teams of about forty. Given no additional resources, I was asked to create different functions and products.
Then the new leadership came in.
And like most leadership changes, there were a lot of promises. A lot of restructuring. And a lot of finger pointing.
It was stressful. The new executive team wanted to please the new CEO. And please all the department heads. This is rarely possible. Because of this, we found ourselves “pivoting” often. Priorities changed weekly, timelines crunched. And I lost confidence in leadership, and my role in this company.
Frankly, I already knew I would leave the company within the next year or two. That was the plan. Get the next owner-occupied property. Then get my first commercial multifamily property while employed. I figured that would give me experience with a new property type, and give me enough of a cash flow cushion to leave corporate life behind.
But these executive changes pushed my timeline up. As soon as the new year came and another round of my stocks vested, I found that next owner-occupied property. The numbers worked. I closed quickly and found a new resident for my old unit at the triplex. Then I lined up some contractors to make some updates to my new unit before I moved in.
That’s when it happened. The meeting that changed my course.
My new boss brought me into a meeting room Friday afternoon. Some bad news: no promotion for me this year. I was bummed. Despite managing five teams with three leads, I was not a director like my peers.
But that wasn’t what got me.
New boss was restructuring the organization (again). I was surprised. This was not the restructure we had discussed for the past month. So I asked why structure the team this way? New boss said, “I’m not prepared to share that feedback.”
I explained my concern. Frankly, the restructure made my job practically redundant. At least from my perspective, as I would have one team and one individual contributor reporting to me. A two-to-one reporting structure is management heavy. Even I would try to get rid of me in that hierarchy. The entire organization hierarchy looked very management heavy. I explained that I thought this was not the best use of corporate money. Especially since the company was not doing well.
Same line, “I’m not prepared to share that feedback.”
I was disappointed and frustrated. And that weekend over dinner I decided I would send my two weeks notice, and typed the email subject: “Thank You | Two Weeks Notice” Sunday morning.
I almost didn’t send the email. Justifying to myself that waiting another year wouldn’t kill me. And to be honest, even though I was looking forward to leaving this company, I grew up there. Worked there for over a decade. It’s depressing that one shitty boss can ruin a career. But that’s how most takeovers go. I confided in my boyfriend, friends and family over the weekend. Everyone agreed, leaving was the right move.
They saw what I couldn’t see.
The toll this lifestyle was taking on me. I no longer enjoyed talking about work. I actively avoided it. Most of the time, I was stressed. Checking my phone and emails habitually. Healthy choices and changes were short-lived. Time off was still just a medication for an overworked life.
While I had moved past a consumer-driven lifestyle, I was still a cog in the corporate wheel. Working nights and weekends, as a senior manager now responsible for several teams, and several middle-of-the-night crises.
So I took another look at my budget. Sure, it would be tight, but I needed a break.
And the worst thing that could happen? I’d have to get another job.
Two weeks later I left the office for the last time. Laptop turned in, company phone turned in. Loose ends tied, obligatory “goodbye” email sent. LinkedIn profile updated. I even squeezed in an Independent Rental Owner Professional (IROP) certification class and exam from the local Apartment Association in that last week.
It was exhilarating.
And terrifying. But mostly exhilarating.