Making it Happen: Anton from DealCheck

This week we have an interview with Anton Ivanov from DealCheck. Anton’s real estate story is great. He started out as an accidental landlord and now has 35 units. The best part? It’s all passive income for Anton; he doesn’t self-manage his properties. Anton is a great example of how truly passive real estate investing can be.

Where are you from?

I was born in Moscow, Russia and now live in San Diego, CA.

About you (brief bio)

I grew up in Russia and moved to San Diego with my family when I was 15. After graduating high school, I wasn’t really sure what I wanted to do, so I decided to join the US Navy.

I served 6 years active duty and was stationed in Sasebo, Japan for most of that time. While in the Navy, I started reading a lot about personal

 finance and investing books and also found out about FIRE. That really put things in perspective for me and I realized I didn’t want to keep working until I was 60, like most people I knew.

I finished my military service in 2013, moved back to San Diego and transitioned to a more “normal” career. I eventually landed a job as a software engineer at a small startup and have been working there ever since.

About 3 years ago, I also started my own tech company – DealCheck, which is an investment property analysis platform for real estate investors and agents.

[Note from Drew: If you aren’t familiar with FIRE – it stands for Financial Independence; Retire Early. I would also encourage you to check out his site; DealCheck is a great resource.]

When did you start investing in real estate?

I actually became an “accidental landlord” when both of my parents passed away around 2009 and I was left with a condo they owned in Southern California.

I didn’t know anything about real estate at the time and was living in Japan, so I almost sold that place. A few of my friends and coworkers convinced me to keep it and rent it out, so it became my first rental property, even though I didn’t actually buy it.

When I finished my tour in the military and moved back stateside, I bought my first property in 2013 – a duplex I house-hacked with my wife.

What markets do you invest in?

I currently own property in San Diego, Atlanta, Birmingham, and Kansas City, 35 units total.

Over the years, I started to prefer markets that had strong economic, job and population projections, but still had relatively low home prices. These markets tend to have a very good mix of price and rent growth, as well as strong cash flow.

A lot of these are inner, growing cities like Atlanta, Kansas City (MO), Houston, Dallas, and Nashville.

 

Are you working in real estate full-time? If not, what do you do?

No, I don’t do real estate full time, it’s more of a passive investment strategy for me.

I’m a software engineer and founder of DealCheck – one of the leading only property analysis tools that I mentioned earlier.

What does your real estate portfolio look like?

I own a total of 35 units:

• San Diego: 1 condo and 1 duplex
• Atlanta: 1 SFR
• Birmingham: 3 SFRs
• Kansas City: 7 four-plexes

  

[Notes from Drew: This is a great looking portfolio. Aton has done a great job accumulating properties. He also used commercial loans to buy the four-plexes in Kansas City, MO. This is a great way to keep growing your portfolio as most lenders limit the number of mortgages you can have.]

What type of real estate do you invest in?

I started by house-hacking a duplex, where I lived in one of the units and rented out the other, which gave me a lot of hands-on experience with buying, rehabbing and managing rentals.

I later moved on to turnkey single-family homes and more recently transitioned to buying small multi-family properties. I plan to keep going with multi-family properties because they simplify management and streamline many other things like purchasing and insuring.

I’m also looking into buying 10-20 unit commercial properties in the next few years as my portfolio continues to grow.

What is your investment strategy?

I’m definitely a long-term buy & hold investor, most interested in cash flow. With that being said, I don’t particularly like extremely discounted, high cash-flow markets, but instead focus on areas which also see price and rent growth over the years.

[Notes from Drew: Emphasis on the cash flow. It is the MOST important aspect to any real estate investment.]

How much time do you spend running your real estate business?

Since I don’t self-manage my properties, the only real time commitment I have is when looking for new deals and managing the closing process on new acquisitions.

If I’m not actively looking for properties, I spent only about an hour a week on my portfolio. This goes toward checking in with my property managers, reviewing monthly statements and managing the accounting.

How has real estate changed your life?

Real estate definitely showed me that retiring early with a meaningful amount of passive income is possible. I was familiar with financial independence and FIRE before I got into real estate, but I never thought I’d be able to get there within 10 years or so.

I was able to get much more passive income from my properties and get a much higher overall ROI on my invested cash (about 20-25% per year) than I could with other types of investments.

[Notes from Drew: Passive income is a wonderful thing. Real estate is a great vehicle for generating passive income and provides the fastest way to financial independence because of leverage. As Anton said, quality real estate investments consistently outperform the stock market.]

What is your goal? What are you trying to achieve with your real estate investments?

My initial goal was to buy 50 rental units, with at least $250 in monthly cash flow per unit. I calculated that this would equate to about $150k in yearly passive income, which was where I wanted to be. Passive income has always been my primary reason for getting into real estate.

Since I got to 35 units a lot faster than I expected, I think I will keep buying more until about 65-75 units and then focus on stabilizing my portfolio, de-leveraging and selling off some of my underperforming properties.

[Notes from Drew: Notice how he focuses on cash flow and passive income. ALWAYS focus on cash flow when you are looking for rental properties. Appreciation is simply speculation. NEVER count on appreciation to make a deal work.]

Please share one of your investment with our readers. Please include general location, property type, some of the basic numbers (cost, returns, etc.)

It wasn’t nearly “the best”, but the most memorable deal was my very first purchase when my wife and I bought a duplex in San Diego. This was the first property I’ve ever bought and the emotions and the hassle I went through stand out the most.

It wasn’t nearly “the best”, but the most memorable deal was my very first purchase when my wife and I bought a duplex in San Diego. This was the first property I’ve ever bought and the emotions and the hassle I went through stand out the most.

This was a 2 story building with 2 identical 3/2 units on each floor. I’d say the condition was poor and it definitely needed a good amount of work and updates on the inside, as well as the outside in the yard.

We bought this property knowing we would be “house-hacking” it for a few years, doing some of the rehab work ourselves, but eventually moving out and turning it into a 100% rental.

The numbers looked something like this:

Purchase Price: $410k

Down Payment: $32k

Closing Costs: ~$3k

Rehab Costs: ~$15k

Monthly Rent: $1750/unit/month

Cash Flow: ~$247/unit/month

[Notes from Drew: wow – this is a great example of real estate investing. Since there are two units, Anton’s cash flow is $494/month after all of his expenses. The duplex provides Anton $5,928 annually. 

When calculating his ROI (Return on Investment) we look at two items. First his investment. Between his down payment, closing costs, and renovations, Anton has invested $50,000 into the property. Second, we look at his return of $5,928/year.

Now that we have these two items clearly defined, we can calculate his return on investment. $5,928 / $50,000 = 11.85% Return on Investment.]

How did the deal go? What would you do differently?

I like to think that this is what started everything that followed in my real estate investing “career”. This first deal taught me more about buying, rehabbing and renting properties than all of the reading and learning I’ve done previously. We still own this duplex and it’s bringing in great cash flow every month.

I’m honestly not sure what I would do differently. Probably stress a lot less about minor things. For a year or so, I would freak out if the gravel around the parking lot was disturbed or if there were any small pieces of trash laying around.

Do you self-manage your property(s)? If not, how did you select a property manager?

I’ve never self-managed any of my properties and don’t plan to ever. The main reason is that I don’t want to deal with day-to-day issues, like looking for and screening tenants, collecting rent, handling disputes or responding to maintenance calls. I’d much rather do something else with my time.

My first step to selecting a property manager is to always find one through a referral from another local investor. I don’t like “cold leads” or using online search. I’d rather work with a company with an extended track record and a recommendation from somebody I know.

Other than that, I like to ask each new property manager a series of questions to learn more about how they do business and what their policies are. I need to make sure I’ll be on the same page as them before we start.

[Notes from Drew: Anton provides a great example on how real estate can truly be passive income. He shows us real estate can provide above-market returns with little time commitment. Being a landlord or property manager is not for everyone. Personally, I like managing my properties but plan to have a property manager one day.]

What advice would you give to someone who wants to start investing in real estate?

It’s tempting to start looking at potential properties to buy right away, but I actually think that focusing on improving your personal finances first will go a long way to helping you be successful with real estate.

This includes the basics like starting an emergency fund, having a budget and working on your saving rate. During the first few years of investing, your portfolio’s growth will largely depend on how much money you can save from your take-home pay.

You may also want to look at your current outstanding debt. Getting rid of as much consumer and high-interest debt as possible will help you qualify for home loans easier, and will also increase your saving rate.

[Notes from Drew: Anton makes a great point. This topic often goes overlooked. You need to have your financial house in order before running off to build your rental property empire. Make sure you are set before taking on the risks of real estate and leverage. I would also add that you should find a mentor.]

What is your favorite real estate book that you have read? Additional book recommendation?

I haven’t actually read many real estate books, but one which I really liked is “The Millionaire Real Estate Investor” by Gary Keller. While it’s not so much of a practical how-to-guide, it gives a good top-level picture of what growing a real estate portfolio looks like.

I’m also a huge fan of the BiggerPockets website, where you can find tons of free information about the various aspects of real estate investing, as well as a great community of investors.