Making It Happen: Brian from Rental Mindset

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My name is Brian and I don’t have the usual characteristics of a real estate investor.

People usually think investors are older. I’m 31 now, but purchased my first rental at 25.

They think you have to be wealthy. My net worth must be under $100k.

Do I live in an area great for rentals? No, I live in San Francisco and own rentals on the other side of the country.

Maybe there is some skill I have that others don’t? Nope, I am fairly passive with my investments. I let others do the work for me and still get a great return.

Why Real Estate?

The returns are worth the hassle.

With the most conservative rental properties and projections, 15% annual return is extremely doable.

You might think, “who cares, not worth my time. Look at this chart:”

Real estate is all about playing the long game. It is a mistake to only think about a 1 year return or a 5 year return. What does it look like over 20 years?

How much work would you do for $400k? A whole heck of a lot! With my passive approach to rental properties, this decision is a no-brainer.

For the biggest reason this is possible, check out my article The Thing Most Investors Don’t Understand about Leverage.

My Current Portfolio

I own two properties, one in Atlanta and one in Memphis.

Both were purchased turnkey, which means a flipper purchased the property specifically to sell to rental property investors. They do the complete rehab, put a tenant in place, and all I have to do is verify.

To this day I haven’t even seen my properties!

The returns are still great paying for others to do the work. With the current upswing in the market, my portfolio is up 31% a year. I expect this to come down to 20-25% yearly return through a complete real estate cycle.

Right now I’m doing a cash out refinance on my original property. I’m pulling out some of the equity and going to use it as a down payment on a new rental. The rental property is cloning itself!

My Typical Deal

Both of my properties were purchased through a national investor network who recommends turnkey providers in specific markets. They provide some hand-holding along the way, which is a great help for a new investor.

Later this year I will look for a new property, here is what I expect:

  • 3 bed, 2 bath
  • Memphis suburb 15 minute drive to downtown
  • B+ neighborhood
  • $100k purchase price
  • With 20% down and closing costs, roughly a $24k investment
  • $1k a month in rent
  • $100 in cash flow a month, after accounting for vacancies, repairs, and saving for big items like HVAC or new roof
  • 20+% yearly return with cash flow, leveraged appreciation, the tenant paying down the mortgage for me, and tax benefits

It’s not a crazy deal that takes a lot of hassle to find. I’m not sending mailers or scrounging the MLS daily.

In fact, I know there are better deals out there if I want to put in more work myself. But right now I’m good with this.

I recommend other first timers keep it simple to start, you can always take on more responsibility later!

You Can Do It Too

It is all about having the right mindset.

Check out my website Rental Mindset for more, including the complete numbers for my properties.

I want to hear from you, what are your objections to this approach? What excuse do you have for why you can’t do it yourself? What is holding you back?

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