My rental property portfolio started the year off with a bang! January was a great month for cash flow. The time commitment was modest and the eviction Saga at rental property #4 was nearing its end. 

The Landlord Report – January of 2019

Hello there – welcome to another “Landlord Report”. This monthly report shares my experiences as a landlord. The report will show EVERYTHING related to my rental properties and life as a landlord.

I will discuss the rents that I collected, mortgage payments, and other ‘landlord items’. I may include repairs, how I avoid vacancies, how I screen new tenants or any other items that pop up. This report will share how I made or lost. I will also share what kind of time commitment was required for being a landlord. I want to show the world being a landlord is a wonderful thing.

Throughout this process, I will be as transparent as possible. Being a landlord and owning rental property is a wonderful way to earn (mostly) passive income and allow you to buy back your time faster.

I hope you follow along with this monthly series. The Landlord Report can serve as a guide to owning rental property. Please feel free to contact me with any questions – happy to provide insight.

The table below outlines all my income and expenses for the past month:

As you can see, January was a profitable month. This month was more lucrative than last month (December 2018). In fact, this may have been my best month ever. Though, in my ripe old age of 28, my memory isn’t as great as it used to be.

I made over $4,200 after my expenses and mortgages were paid. My rental property portfolio produced income while struggling through an eviction where a tenant is not paying rent (more on this later).

The eviction saga is almost over. Rental property #1 and rental property #2 enjoyed a perfect month. Rental property #3 and Rental property #4 had a few minor items to report. Being a landlord is not all sunshine and cash flow. But! I still love being a landlord.

Below you will find a detailed account of what happened at each property this month. In addition to the information below, DC experienced snow a handful of times which require me to salt and shovel a couple times. Not fun but I sleep better at night without the potential liability. 

Rental Property #1

The Starter Home

Things were absolutely boring and easy with rental property #1. There were no repair or maintenance items this month. The tenants paid their rent in full and on time. I collected the $2,325 on my way home from work. This costs me about 15 minutes of my time.

My former roommate and longest tenured tenant lives at rental property #1. He informed me he is relocating for a new job. My tenant will be leaving the DC area in March. I will need to find a replacement in the coming weeks. This may be a bit of a scramble, especially since its winter. It’s never good to a vacancy in winter but I am hoping to find someone quickly.

Given he is also a friend, I will be more accommodating than usually. Usually, I take a tough but fair approach to managing tenants. 

Rental Property #1 Summary

In summary, rental property #1 – earned $356.76* earned and I spent about 45 minutes managing the property.  My mortgage debt dropped by $720.76 from my monthly mortgage payments. When considering the principal reduction, I came out ahead by $1,077.52.

*Remember – this is an accidental rental that I plan to live in during FIRE.

Rental Property #2

The Fixer-Upper Rental property #2 had a perfect month. The tenants paid their rent of $4,050 in full and on time. Rent collection required me walking downstairs to get my morning cup of coffee. Does life get any easier than that?

Also, three of my four roommates/tenants renewed their leases.

Two of the tenants renewed for another 12-months.

One of the tenant’s rent is staying the same. I took a stab at increasing his rent but he balked. He isn’t willing or able to pay more and I don’t want to find a replacement for him. You may call this laziness but sometimes small rent increases are not worth the hassle of finding a new tenant.

The other guy staying for another year rent increased by $50/month. 

The third tenant’s rent will increase by $100/month. The lease is converting to month-to-month which is her right under DC Landlord/Tenant laws. Her plans include buying a place in the near future and doesn’t want to be stuck with a 12-month lease. I’m happy she is pursuing homeownership and am encouraging her to use an FHA Loan.

The month-to-month lease is not my preference. I even offered more appealing economics for a year commitment but she prefers the flexibility. I will enjoy the $100/month increase and she still is required to provide 60 days notice before moving out. 

I’ve achieved $150/month rent increases. This means rental property #2 will earn an additional $1,800/year.

My fourth roommate will be moving out. There will be an opportunity to rent his room for an additional ~$50 increase as well. If I get the rent increase on the fourth room, that will be $2,400/year increase in rental income for rental property #2

Rental Property #2 Summary

In summary, rental property #2 – earned $1,414.89**. I spent about 4 hours managing rental property #2 this month. My mortgage debt decreased by $755.57. When factoring paying down my debt, rental property #2 made me $2,170.46. Not bad for about a couple of hours of work. Oh, and I got a free place to live.

**I also live in the house and get paid to live here. Pretty sweet right? House Hacking is awesome.

Rental Property #3

My Duplex

From a maintenance standpoint, things were great at rental property #3. Other than snow removal, there were no matters that required my time.

From a general management statement, things were busier. I received notice the tenant in unit #1 subsidy will expire at the end of April. As such, I sent her a letter informing her of her options. She will be required to let me know by the end of February if she intends to stay or leave.

Unfortunately, I also received notice the tenant in unit #2 is also losing her subsidy. This notice came with a shorter timeframe; she will be moving out at the end of February. I will almost certainly incur a vacancy in March.

This misfortune will allow me to finish the utility conversion. The utility conversion will probably cost me $2,700-$3,000. A lofty price tag but worth it. You see, I will probably save this much annually by no longer being responsible for the gas bill. Stay tuned. Rental Property #3 may have a bumpy month or two. 

Utilities for the property:

Gas Bill: $234.92

Water Bill: $257.41

Electric for unit 2: $77.41

In summary, rental property #3 – made $1,246.81 and I spent about 2 hours of my time managing this property. Rental Property #3’s mortgage debt also decreased by $424.72. When factoring in paying down my debt I made $1,670.90.

Rental Property #4

Well, the eviction saga continued in January. I received a call from the US Marshal service in the middle of the month. The eviction is scheduled for early February. Look forward to wrapping this process up. 

Otherwise, there was no activity at the property. Utilities were:

Water Bill: $154.13

Common area electricity: $32.25 

In summary, rental property #4 – made $1,254.27 and I spent about 2 hours of my time managing this property. The property will be more profitable once it’s fully leased. Rental Property #4’s mortgage debt also decreased$446.23. When factoring in paying down my debt I made $1,700.50.

Portfolio Summary

In summary, I spent about 8 hours and 45 minutes of my time maintaining my rental property portfolio. In January, my rental properties made $4,272.10. I made $488.24/hour being a landlord.

Being a landlord is provides one of the best dollars per hour sources of income. My mortgage debt also decreased by $2,347.28 in January. Gotta love having tenants pay off over $2k of my debt every month. Factoring in repayment of debt and cash flow, my rental properties made$6,619.38. So, I made $756.50/hour. Being a landlord and owning a rental property portfolio is a great way to build wealth. What is your excuse for not owning rental property?

Welcome back to part three of the series. The first part of the series covered real estate cycles and my personal experience with them. Last week, we deliberated over real estate strategies and goals.

Now that we have established the real estate basics and how to pick a strategy – let’s jump into finding real estate deals. If you are behind, please check out the previous posts below to learn about real estate investing.

Part I, Understanding Real Estate Cycles, covered:

• Understanding real estate cycles
• How long real estate cycles last
• Phases of real estate cycles
• My experience with real estate cycles

Part II, Selecting a Real Estate Strategy, covered:

• Real Estate Strategies
• Setting your real estate goals
• Aligning your real e estate strategy with your goals
• Specializing in real estate investing

Part III, Finding deals, covers Finding deals:

• My approach to finding real estate deals
• Creating your criteria
• Create deal funnels
• Analyze Daily

How to Find Real Estate Deals

I want to share with you my approach to finding great real estate deals. As we previously discussed, there are always deals regardless of where we are in the real estate cycle. I take three simple steps when I am looking for a new property. My systematic approach has allowed me to find the best real estate deals. I know this method will provide great guidance for many of you reading this.

How I find deals

When I am in ‘deal mode’ or looking for a new deal – I’m like a machine and approach finding real estate deals like clockwork. My repetitive approach has served me well and may work for others. This post will teach you how to source real estate deals.

My three step process to finding real estate deals:

1. Create search criteria
2. Create deal funnels
3. Analyze daily

1. Create Search Criteria

Creating search criteria is the first step. That’s right, creating search criteria is my first move when I want to find a new deal.

The search criteria should fit an investor’s real estate strategy, be realistic, and specific. Having specific search criteria helps me sift through listings and provides clear guidance of what I want. Likewise, this will help you screen deals.

Creating your search criteria is paramount; you cannot find what you are looking for if you do not know what you seek. I highly recommend you do not skip this step. Make sure your search criteria matches your real estate strategy. And make sure your search criteria is reasonable. Don’t chase unicorns.

Are you looking for a long-term, buy and hold, rental property that will provide consistent cash flow?

Are you looking for a property that you can fix-n-flip?

Or maybe you are looking for a property that you can wholesale to another investor?

Do you want a turnkey property that requires little or no work?

All of these are great strategies that can yield great results for investors. However, each of these strategies requires a certain type of property.

The perfect property for the flix-n-flip investor would not be appealing for a turnkey investor. Likewise, a turnkey property may not be attractive for a wholesaler. Some properties may work for multiple strategies. Most properties will only work for one or a few strategies. No property will work for all real estate strategies.

Don’t waste your time with bad deals or properties that don’t fit your needs. This is why you must have a real estate strategy, know what you are looking for, and have specific search criteria.

Take a moment and figure out your search criteria.

Asl yourself what are you looking for in real estate? Your search criteria and real estate strategy should be aligned.

For example, If you are looking to flip a property make sure you are buying the property well below after repair value (ARV). A good rule of thumb is 70% of ARV.

Likewise, I am a long-term investor. I like to buy and hold my properties for cash flow. More specifically, I like single family homes or 2-4 unit buildings. I prefer properties that require some renovations so that I can create additional value. More importantly, I care about cash flow. The property’s rental income will need to cover all repairs, maintenance, taxes, insurance, and the monthly mortgage. Additionally, there needs to be money left over for me to put into my pocket every month.

Based on my previous statement, I am probably not interested in single family homes located in the best neighborhoods. At least, not in DC. Homes in the more expensive neighborhoods sell for well over $1 million. The rent for the same home would be well below the one percent rule and not even cover the mortgage.

It doesn’t matter what real estate strategy you use. Just make sure your search criteria fits your goals and strategy

2. Create Deal Funnels

Step two – create deal funnels. I create as many deal funnels as possible. Creating deal funnels is essential to being efficient. These funnels bring me deals which saves me time. . Three of the deal funnels I use are the MLS, Redfin, and my real estate network.

Multiple Listing Service (MLS)

First, I relay my search criteria to my real estate agent. My agent then creates a daily (or instantaneous) report on the Multiple Listing Service (MLS) based on the information provided. The MLS is where most every property is listed for sale.

Your real estate agent should have access to the MLS. Inform your real estate agent what you are looking for. A good real estate agent will be able to generate an automated report for you. Be sure to find a real estate agent that’s an experienced real estate investor. Even better, find one that has experience with your real estate strategy

Redfin

Second, I love the Redfin app. Like my approach to the MLS, I set up my own searches through the free app/website. The interface is easy to navigate and Redfin allows you to create multiple ‘saved searches’ based on different search criteria.

Based on my search criteria, I get instant notifications sent to my phone any time a new deal is listed that fits my criteria. This is very important. In a hot market, real estate deals move quickly and timing is essential. Jumping on a deal is a must – especially in a hot market. If you wait a couple of days, someone may snatch up the property.

Real Estate Network

Third, I reach out to my real estate network. I let my real estate connections know I am on the prowl for another deal. This list may include brokers, property managers, real estate agents, contractors, and lenders. Attorneys and CPAs can also provide a good source for deals; both of these specialists see plenty of off-market deals. The more people that know what you are looking for the better.

Build a real estate network if you do not already have one. I recommend going to local real estate meetups. Find other investors in your area and schedule as many coffees or lunches as possible.

3. Analyze Daily

While on the warpath searching for a new property, you must look analyze deals daily. This is how to find incredible real estate deals. Every morning, while I sip coffee, I spend at least 30 minutes to an hour looking at new listings. If you snooze, you lose. Good real estate deals move quickly, especially in a hot market.

Analyzing real estate deals should become a habit. Likewise, you need to make analyzing deals second nature. You need to develop the ability to confidently and efficiently analyze a deal. Over time, your skills will improve and you will develop a knack for spotting good real estate deals.

Some important factors to remember when analyzing deals:

• Vacancy – don’t forget to factor in future vacancies
• Reserves – real estate is a physical asset that requires upkeep. Make sure factor in a reserve budget for future repairs. Over a 30 year period, everything will need to be replaced.
• Repairs – things break. There are no two ways about it. Don’t forget to account for future repairs.
• Real Estate Taxes – you must pay them. Check the local government website for property tax rates.
• Insurance – don’t be foolish, pay for insurance.
• Rent assumptions – what are you basing your rental assumptions on? Check rental websites, craigslist, and with other investors for rent comps. Make sure you rents are not below the market rate. Likewise, you don’t want to get blindsided and realize your assumptions are well above the current market rental rate.
• Renovation Budget – get multiple bids from contractors. Make sure your renovation budget is reasonable.
• Contingency – Building in a buffer or contingency into your renovation budget. I would recommend 5-10% of the total budget. So if you have a $50k renovation. You should have up to $5k for cost overruns.

I hope these three simple steps will sever you well. These exact steps enabled me to buy 4 properties in 4 years. I was able to go from being in debt to a net worth over $650k in 5 years. My success was largely driven by real estate and I know you can have similar success. Now go out there and find great real estate deals.

Now that we covered real estate cycles in part I, let’s discuss selecting a real estate strategy. As we previously discussed, regardless of where we are in the real estate cycle, there are always deals out there. Before you dive into finding deals, you should know what you want out of real estate. Develop an understanding of why you want to invest in real estate. This will help you select your real estate strategy and goals.

Your real estate strategy and goals

Your real estate strategy will guide you on your quest of finding a property. There are dozens of ways to make money in real estate. Some strategies may be more appealing than others. Likewise, other strategies may not work for every investor. Knowing your strengths and goals will help you select a strategy.

Most real estate strategies can be lumped into two categories – mostly active strategies and mostly passive strategies.

Mostly active strategies – include activities like wholesaling, fix-n-flip, live-n-flip, BRRR, arranging syndications, and being a real estate agent. All of these activities require meaningful time commitments. Active real estate strategies can yield great returns (or losses). After the transaction is done, the investor realizes a profit (or loss) and then they’re in search of the next deal. There is no residual income. Active strategies require the investor to exchange time for money.

Mostly passive strategies – include house hacking, buy and hold rental properties, participating in a syndicated deal, and private lending. All of these activities require some time and energy upfront. However, long-term, the time commitment is low compared to active strategies. The mostly passive strategies provide a residual source of income. This approach allows the investor to collect a reliable stream of income every month for little or no effort.

What strategy is right for you?

There is no right or wrong path in real estate. I’ve known investors to create prodigious wealth by flipping houses. Likewise, I’ve seen investors enjoy amazing cash flow generated from their rental property portfolios.

Take a moment and think about what your goals are in real estate investing.

Ask yourself the following:

Are you looking to accumulate capital for your time?

Are you looking to build wealth quickly?

Are willing to put in a lot of time and energy?

Are you willing to take more risk to reap larger profits in a shorter period of time?

If so, the mostly active strategies may be more appropriate.

Now ask yourself:

Are you looking for less of a time commitment?

Are you more comfortable taking less risk and willing to accept lower returns?

Are you looking for a steady and reliable income?

Are you looking to build wealth gradually over time?

If so, the mostly passive strategies may be more appropriate.

Some investors prefer mostly active strategies. This approach to real estate investing can be lucrative and provide a great way to build capital – especially when you are starting out, and have limited cash. The more active strategies provide a way to create a mountain of cash in a shorter period of time.

However, I find these activities more like a job. After a flip, wholesale transaction, or closing a deal as an agent you collect a fee (profit). Once this fee is collected, you are back to ground zero and do not have a residual income stream. You simply traded time for dollars. Some may be ok with this.

I prefer the mostly passive strategies (will touch on this in a moment).

Specialize

Investors new to real estate investing should specialize in one aspect of real estate. Focusing your time and energy on one specialty will make you a better investor. Success becomes more obtainable with a singular focus. This approach allows an investor to improve and eventually master their craft. Mastering a craft yields better long-term results.

Alternatively, poor results are often the byproduct of attempting too many things at once. If an investor attempts to wholesale, fix-n-flip, and build a portfolio of long term buy and hold rental properties all at once – they run the risk of spreading themselves too thin. Their attention will be pulled in too many directions which may result in not getting deals done. Or worse yet, the investor will poorly execute their strategy.

My real estate strategy and goal

My real estate strategy is to buy and hold properties for cash flow. My goal is to generate enough cash flow from my rental property portfolio to cover my living expenses. More specifically, I prefer buying ugly properties that need a moderate amount of work. I’ve found the best value and returns in this space.

Additionally, I look for two types of properties:

First, I am interested in single family homes with at least three bedrooms and the potential to add another bedroom or two.

Second, I seek buildings with 2-4 units.

I love passive income provided by rental properties. I like investing for cash flow, buying and holding properties long-term, and collecting checks every month. Building a rental property portfolio of a couple properties has afforded me a full-time income for part-time efforts.

Last year, my rental property portfolio increased my net worth by over $50k. The best part? I can depend on my rental property portfolio to provide steady income year after year. Over time, my income will increase with inflation as well.

Occasionally, I will entertain a turnkey property. A turnkey property requires little or no work. As such, the investor may walk into instance cash flow at closing. In some instances, the investor may need to find tenants but all the units are ready to be occupied. Turnkey properties provide lower investment returns compared to renovating the property yourself. However, turnkey properties require less time and energy – so there is a trade-off.

Summary

What do you want to achieve by real estate investing? What are your real estate goals? Do you prefer to spend more time actively working on projects like flips and wholesaling? Or would you rather focus on more passive activities like rental properties?

Next post, we will explore creating your search criteria and finding deals.

Many readers have emailed me asking how I find my real estate deals. Often, readers share their struggles of how they cannot find good deals. Sometimes readers even say there are no deals. This is a limiting belief. Deals are always out there if you are willing to look. With that said, I also share in my readers’ frustration as finding a good deal is not always easy – If it was easy, everyone would do it. Though, nothing worth having ever came easy.

This post will cover the following:

• Understanding real estate cycles
• How long real estate cycles last
• Phases of real estate cycles
• My experience with real estate cycles

Part II, Selecting a Real Estate Strategy, covers:

• Real Estate Strategies
• Setting your real estate goals
• Making sure your strategy aligns with your goals
• Specializing in real estate investing

Part III, will cover Finding deals:

• My approach to finding deals
• Creating your criteria for deals
• How to look at deals differently than the competition
• Overcoming Analysis Paralysis

Understanding Real Estate Cycles

Being a successful real estate investor requires finding deals. You cannot be a real estate investor if you never buy a property. The real estate market ebbs and flows and will continue to do so. Depending on where we are in a real estate cycle, finding a good deal may be easy or very challenging.

Understanding real estate cycles is important if you want to play the real estate game. There are always good deals regardless of where we are in the real estate cycle. My mentor always reminded me that he bought his best deal at the height of the market. That’s right – he bought his best deal just before the market crashed in 2008.

Today, he laughs about this when he reminds me of this factoid. His success was a direct result of sticking to his fundamentals. My mentor invests for cash flow. He does not buy to speculate about appreciation – he buys for cash flow.

How long do real estate cycles last?

Research from the past 200 years suggests the average real estate cycle is 18 years. Some cycles may be longer while others may be shorter. However, on average, a real estate cycle lasts for 18 years. The table below summarizes the history of real estate cycles:

As you can see, most real estate cycles last about 18 years. There are two notable exceptions. First, the Post World War II expansion which was one of the greatest economic expansions in history. And second, the ‘bust’ in the 70s where the Federal Reserve doubled interest rates to tame inflation. Otherwise, 18 years is pretty much the standard.

Phases of real estate cycles

During a cycle, the real estate market will experience a boom and a bust. The ‘boom’ part of the real estate cycle consists of two concepts – recovery and expansion. The ‘boom’ times usually last for 15-16 years. This is where property values rise, confidence increases, and developers build which increases supply. The ‘bust’ times usually last 2-3 years. During bust times, property values are usually in free fall and it’s a buyers market.

My experience with real estate cycles

My love affair with real estate began in 2013 when I was searching for my first property. I checked out a few homes, found a place I liked and submitted an offer. My offer was accepted and I had the property under contract. After the home inspection, I decided to walk away. The inspector discovered a mold infestation in the attic. The roof and all the support beams were rotted out and needed to be replaced as well. I would’ve walked into a money pit.

The property I walked away from was inspected in November of 2013; I paused my search to enjoy the holidays with family.

After an enjoyable holiday season, I was revved up and ready to go. I bought my first property in early 2014. The home was located in a working-class neighborhood and had three bedrooms and two bathrooms. There was nothing fancy about the place and many would consider it a ‘starter home’.  I was house hacking to keep my cost of living low; this allowed me to save a ton of money.

The best deals occurred between 2009 and 2012. During this time frame, many short sales and foreclosures (bank owned properties) took place.

However, deals were still easy to find during 2013 and 2014. I was fortunate to enter the market at a good point in the real estate cycle. By this point, we were probably past ‘Phase I’ and in the early stages of “Phase II’. Property values were still below pre-recession highs. Banks were lending again and the rental market was strong.

After enjoying modest success at my first property, my doctor confirmed that I was infected with the real estate bug. Rental Property #1 was great and significantly reduced my housing expenses. I was paying ~$400/month to own a home in the Washington, D.C. area. The alternative was renting a 1 bedroom apartment for $1,500/month (likely more).

However, I lacked cash flow and was paying to own my property every month. I wanted to be paid. Cash flow, I discovered, is the most important factor in real estate investing.

In 2015, I began looking for another property to buy. The first and most important factor in my search criteria was cash flow. While my first property lowered my living expenses I wanted to get paid while house hacking. This would also allow me to live for free. Actually, I would get paid to live.

The real estate market was booming in 2015. Prices were increasing and in some instances skyrocketing. My search began by looking at duplexes, triplexes, and quadplexes. Locally, developers were having a field day converting these types of buildings into for-sale condos.

Properties were receiving a dozen or more offers and selling above asking price. In fact, many buyers were submitting all cash offers. My offers’ were contingent on FHA loan financing (low down payment) and would take about a month to close. As a result, my offers were not appealing and many sellers overlooked them.

Fortunately, I found an old, rundown rowhome in an up-and-coming neighborhood. The property was listed at an obscenely high price – mind you this was when I found the listing. The listing agent had already cut the asking price three times. My agent and I put our heads together and submitted a lowball offer.

To my surprise, I received a call from my real estate agent the following day. He informed me my lowball offer was accepted. I was shocked, fearful, and then excited. You see, the purchase price was on the high end of my comfort zone. The property needed a full renovation and I had limited funds. Between a 203K FHA Loan, and maxing out three no-interest credit cards I was able to pull off the renovation.

I moved into the new property, elected to live in the smallest room, and rented the remaining rooms. I was living for free. Better yet, I was actually getting paid about $1,500/month after all expenses and the mortgage to live in my own house. This allowed me to quickly pay back my credit card debt.

In 2016, my desire to own cash flowing real estate didn’t fade. The DC real estate market was hotter than ever. The city was still booming and property values continued to trend upward. Based on my experience, I would say we were nearing the peak of ‘Phase II’ in 2016.

I submitted several offers that year and lost several bidding wars. Heck, I even had the highest offer on one property. However, the seller selected a lower, all-cash offer. I was shut out in 2016 and unable to buy a property.

I opened up a HELOC (home equity line of credit) at the end of 2016 and had been saving aggressively for over a year. With a mountain of cash behind me, I was ready to make a deal. I still desired more cash flowing real estate. 2017 would be my year; I was determined to find a (good) deal.

Property values continued to rise. At this point, the more well-established neighborhoods no longer provided quality investment opportunities; the returns disappeared. Some of the ‘up-and-coming’ neighborhoods were becoming too expensive as well; returns in these neighborhoods were declining.

This led me to look in new areas. I wanted to be in the next hot market. I decided to explore on the fringe. I sought places that everyone would want to be in one, three or five years.

After educating myself on the upcoming development trends, I identified a few neighborhoods with potential. This served as a great strategy as I closed on rental property #3 in the first quarter of the year. The duplex was modestly improved and rented out a few months later.

Towards the end of the year, I got a notification on my phone which turned out to be a pleasant surprise. The notification informed me a property I saw earlier in the year was back on the market. This triplex was under contract for a long time but the buyer was unable to close. The seller was fed up and relisted the property.

This is where I stepped in and bought rental property #4. The property has been like a redheaded stepchild (no offense to my ginger friends). The renovation went well and the property was ready to go in less than 60 days. However, the property sat vacant for over 9 months as the city made me jump through unnecessary red tape.

You see, DC has shotty recordkeeping and had no documentation of the building. They claimed the property did not conform to the zoning ordinances. Long story short – they were wrong and I was right. The property is now humming along but it took most of 2018 to stabilize the property.

I was intentionally out of the market in 2018. I had bought two properties in less than six months the previous year. My cash reserves were depleted, I was focused on getting rental property #4 up and running, and I needed to repay my HELOC. The real estate market still moved forward in 2018 as prices climbed to record highs. There was less inventory to go around. Increased interest rates also sidelined some would-be buyers.

As we enter 2019, many people are concerned about a recession. Likewise, many are concerned about real estate prices and think we are due for a pullback. Candidly, we are a bit ‘long in the tooth’ as the United States’ economy has experienced one of the longest economic expansions in history. We are probably near the peak or in ‘Phase III’. However, the real estate market may not slip into ‘Phase IV’ for a few years.

I am still actively looking for new real estate deals and have submitted multiple offers this year. However, many deals do not provide appealing returns. Given that we are probably late in the current real estate cycle, it’s more important now than ever to stick to fundamentals. Do not forget that cash flow is king. Don’t do a thin deal or leave yourself little room for error.

The economic data suggests the economy is on stable footing. Don’t let the fear-mongering media convince you otherwise; their job is to drive ratings and attract eyeballs. Based on the 18-year cycle theory, we shouldn’t expect a real estate correction/pullback until 2024.

If you are struggling to find, its probably because of where we are in the cycle. Keep in mind that every market is different and that there is always a deal out there. A few years ago I might’ve looked at 8-10 places before finding a quality deal. Today, I scan dozens of deals before finding a quality investment opportunity.

Stay tuned for part II… where I will cover how I find my deals

Flashback to when you were a senior in high school or college. Do you remember the second half of the year or final semester? Did you get that itching feeling where you were ready to be done?

I believe many referred to this as senioritis.  Common symptoms include but are not limited to lower grades, not completing assignments, cutting class, laziness, lack of motivation, and finding it difficult to get out of bed in the morning.

I definitely caught this bug in high school and college.

I vividly remember all of these symptoms. Skipping class was a regular event in high school. I skipped so much class that I was reported for truancy; this almost resulted in legal action by the school/county. I knew skipping class was wrong but my friends and I still checked out of school.

High School Senioritis

We had senioritis and we had it bad. It got worse as the weather got warmer. We would play hooky from class any chance we got. Our go-to adventure was a day trip to the rope swing in the afternoon. This was a cool outdoor spot that we converted into the ultimate ‘bro spot.’ This place was equipped with fishing equipment, a fire pit, benches we made out of logs, and a rope swing that would carry us out into the middle of the creek.

We often found ourselves at the bro swing during the middle of the day or after school. Casually swinging into the water, lazily lounging around in a hammock, and occasionally sipping on a beer was common practice. No thoughts of school and not a care in the world. Life was great and we lived in the moment.

At this point in life, I was doing the minimum to get by. To say that I was checked out was an understatement. I was mentally done with high school and ready for the next chapter of life. College, parties, girls, and freedom. Pretty much anything but that essay for my high school English class that I had not started.

Unfortunately, my senioritis got the best of me. I had to take a course over the summer to officially graduate.

College Senioritis

I also remember the exciting feeling of the unknown associated with the next steps in life. During high school, it was moving out of my parents’ house, moving away and attending college. Making new friends and saying goodbye to old friends. Not having to follow any rules. Better yet, setting my own rules.

Stay up til 4:00 am when I have an 8:00 am a lecture? You bet.

Feel like sleeping in until an ungodly hour? Check.

Learning that every action in life has consequences? Sometimes the consequences are good and other times they are bad. Learned that too.

College is often a great place to learn both academic and life lessons. Personally, I made many mistakes and experienced many growing pains as a college student. I made some expensive mistakes like failing out of college… Twice.

I also learned many life lessons and gained academic knowledge while in college. After a few years of trial and error, I finally got the hang of this ‘school thing’. I transferred to a new school and got my shit together. This was reflected in my improved GPA and graduating near the top of my class.

But… senioritis seemed to make a comeback my last semester of college.

During my senior year of college, that exciting feeling returned. This was accompanied by listening to “Graduate” by Third Eye Blind on repeat and full blast.  The next step in life was ‘becoming an adult’ or ‘adulting’ as the kids call it these days.

My concentration waned that final semester. I kept most of my grades up but definitely slacked off towards the end. The seniors (my self included) were definitely having more fun than we probably should have; I have no regrets about my decisions.

Leaving the academic world and creating the life of my dreams awaited for me. The economy wasn’t in the shitter anymore, but things still weren’t great. I had applied to almost 100 jobs with no luck.

Thankfully, I found a job shortly after graduating with the assistance of the school’s President; he was kind enough to refer me as ‘his best student’ to a local employer. Since then, I’ve been in hustle mode.

Also see: Negative Net Worth to Over $500,000 in 4 Years

Introducing Senioritis FI

Warning: Symptoms of Senioritis FI may include a decline in work ethic, increased apathy in the workplace, increased daydreaming of financial independence, planning more vacations, drafting an exit plan, less motivation, and that unmistakable feeling of being ready to be done.

Today, I feel like I’m in the final semester on my path to financial independence (FI). I’m mentally checked out and ready to be done with Corporate America. Every day, notwithstanding the crazy market conditions, I am blazing closer and closer to financial independence. FINANCIAL FREEDOM.

I have that itchy feeling of Senioritis FI. My desire to work hard or even work at all is dissipating. Getting out of bed some mornings is a struggle. It’s challenging to keep my work ethic up some days. Heck, I might’ve even played hooky from work a few times.

I am not financially independent yet, but I am close-ish. There is definitely a light at the end of the tunnel. Most months, my rental properties provide enough passive income to support my spending habits and lifestyle. But, my emergency fund is light (thanks rental property #4), most of my investments are in retirement accounts, and I still need to build up a buffer.

Yet, part of me longs for a gap year like Noah and Becky took last year. Check out their year-long adventure here. Or maybe do something cool like Chad Carson’s 17-month adventure with his family in Equador which you can see here.

Or wouldn’t it be awesome to move abroad like Jim; he retired at the end of last year and heading to Panama with his family. Maybe cruise around the states in an Airstream like Steve and Courtney. Better yet, I could be reunited with my love (the mountains), go hiking and play with dinosaurs like Carl.

My work is no longer fulfilling. I am tired of battling with burnout and am ready for a change. I am ready for some downtime and to focus my life energy on meaningful and fulfilling activities.

Though I have not achieved financial freedom, I am confident that I could survive a long time without much financial pain. I am leaning towards taking a gap year (or longer) to decompress and enjoy life. Traveling the globe and knocking out bucket lists items while I am still in my twenties sounds very appealing.

But what if I cannot get another job with similar pay? That’s ok. Do I enjoy my six-figure income? Sure. But I was able to get by on less than half of what I make now. I don’t need to make $100k+ a year to survive. I was able to save money on an entry-level salary. Also, I have my real estate income to fall back on now – which I didn’t have 6 years ago.

What if you can’t get another job? Well, that’s a risk I am willing to take. I am willing to bet on myself, my drive, and skill set. I think someone would be willing to employ me again if I needed it. Would it be the same type of work or pay? Maybe not, but I could get by waiting tables or flipping burgers. This is kind of like BaristaFI.

At a minimum, some may say I am Lean FIRE and able to cover all the essential expenses. I am definitely not Fat FIRE like some. Candidly, I don’t know if I ever need to be Fat FIRE as I have never spent that much in a year.

Maybe I will give into my Senioritis FI and pull a fuck it FI (FIFI) like my friend Miss Mazuma.

Or do I suck things up for another year? And add plenty of cushion in my financial freedom plan and retire at the ripe age of 30? Or perhaps I find a way to overcome burnout, learn to deal with Corporate America, and keep working for a while.

Like college, and high school before that, I don’t know what I am doing next. The thought of the unknown both terrifies me and excites me. One thing I know for sure is I’ll be ok because of the work I’ve already done. Decompressing and enjoying life is high on the priority list.  I look to knock out some bucket list items and catch up on some much-needed travel. Full-time entrepreneurship also excites me; the thought of syndicating apartment buildings would get met out of bed in the morning. I also have some non-profit/philanthropic endeavors that have been sitting on the backburner for years. Stay tuned.