Navigating Real Estate Investment: Strategies, Risks, and Rewards

This is the opportunity when rates are high, people are scared at the market. If you can afford it, jump in. Payment's not going to be fun, but if we can go get an amazing deal price point-wise, I always tell people the most money you're going to make on your property is the price point you get in at. You can get that amazing price point, have a payment that you can afford that might not cash flow, might not get you to what you want right now, but if you're patient and the rates drop to 5.5 and everybody's running into the market, that, hey, I have this amazing property I can compete with anybody with. I didn't have to refinance it and get the low rate, get the low payment. You've been doing work to get, keep the unit in shape and get the rent paid. Hey, you have a cash flowing property within a year or 2 years, whenever the rates drop, obviously.

Welcome to the She's Got Assets Real Estate Investment Podcast. I'm the host, Shona Leffis. Follow along as we unpack and demystify real estate investment strategies through expert interviews and personal experience. From how to find off-market deals to creative financing to long-term and midterm rentals. We aim to educate and inspire others to gain financial freedom and generational wealth through real estate. And as always, please subscribe so you never miss an episode. We really appreciate reviews. It helps others find us and just helps us get found. Welcome to the She's Got Assets podcast. I have a really special guest today. He's local in the Portland, Oregon area, Steven Tran. He's a real estate agent and an investor. So I'm really excited to chat real estate talk shop. So Stephen, if you want to give a little background and what you're up to and your investment stuff, that'd be awesome.

Sure. Yeah. I've had a kind of interesting journey into real estate. Born and raised in Portland, Oregon. Left for college, University of Washington, and then I moved to the Bay Area on a whim. I'd never been there before and I jumped into marketing. After a couple years, I transitioned into software engineering. I had the career, my dreams, all the perks, the catered lunch and things. Definitely wasn't thinking about real estate at all. Obviously Bay Area, like you said, even if you're dual income software engineers, you're living an hour outside the city because that's really what's affordable. So real estate wasn't anything that I was ever thinking of. And I thought I was building my wall, just my W-2 job. At a startup. And so I had a family emergency at home. My parents had a business that was failing. They were not paying their mortgage. And basically their business and their property was falling into disarray. And it eventually went to foreclosure. So I had to come home and take care of them. And basically my older sisters, they're like, you're the one who's going to have to buy them a house. And coming from no experience with real estate, not thinking about it, not thinking it's a good investment, I was pretty unhappy about that. I'm the youngest in the family. Why am I in charge of this? I worked hard for my career, et cetera. And I was thinking like, okay, so what's the mortgage going to cost me? Like $2,500 a month out of my pocket for mom and dad to live? Like, how's that fair? I didn't know anything about owning assets or the benefits that could come from that. And through all my complaining and just moaning to my sisters about this, and like I said, everything is still happenstance. My sister was like, why don't you just buy the fourplex and just rent out the rest of the units? And I was like, I can do that? Like, I thought I was just buying a house. And so listen to my lender, listen to my agent. They're like, yeah, you can totally do this. FHA, 5% down, go. Hey, buy a fourplex. And this is 2019. Market wasn't super hot or anything. There were multifamily sitting in the market and we found one. And let's just say this, I did no vetting, no nothing. I did not care, did not want to do this. So I blindly said, sure. I asked my sister who did a little bit of property management for Multnomah County for their homeless shelters. I was like, hey, you think this is a good investment? Do you think this is okay? And she was like, ah, yeah, sure, whatever. So like I said, I find it funny that I, and I always make this joke that I fell ass backwards into real estate investing. Bought the fourplex, 4 units, $675K, and was able to mostly cover my mortgage. My parents obviously had a unit to live for free for a couple years. So that was my fall into accidentally getting into real estate investing.

That's amazing. That's— to buy a fourplex as your first reluctant investment is pretty sweet.

Yeah. I mean, like you said, I feel very lucky. Obviously I was in the fortunate position to have a really good paying job in the Bay Area. And my company was also willing to let me transfer my job to being remote even before the pandemic. I was like one of the first remote workers back in 2018, 2019. Transferred to Washington State, which is great because California is like what, 13% state income tax to 0% state income tax. So that was a huge savings. That on top of obviously buying a property, that definitely helped a lot and made it a little bit of an easier transition for me.

Yeah. That's super cool. Yeah, I can relate to the prices. I'm from up north, Mendocino, and I, growing up, real estate was like out of the question. I'm like, there's no way.

Exactly. Yeah.

It was insane. That is, that's so cool that you got to help your family out and set you out on this journey and the fact that you bought something and I feel like we all stumble and it's great that it, I'm assuming it worked out well.

Yeah, no, this is the funny thing. Like you said, I had a whole first year of just like, oh, whatever. Like I'm learning how to be a landlord, had a couple, like one, one or two bad tenants and it move out. And my average rent when I started was $900 a month. I think I was putting out probably $1,000 a month to my parents to live in the unit to cover the utilities and the expenses. A year had passed and through one bad tenant who ran off and another tenant who decided to leave, and me being the cheap ass that I am, I went in and tried to learn how to renovate my own units say those first renovations were not good. I was able to bring my average rent to about $1,200 within a year through bad circumstances. And like I said, they were very stressful at the time. And if I knew what I know now, I would obviously do a better job or pay out. But like I said, I was so clueless about real estate a year in, and my lender reaches out to me and says, hey, rates dropped a whole percent. Do you want to refinance? I was like, This guy cost me money. And like, I didn't understand the process of it. He said, I think this is a really good idea for you. Your property probably gone up in value, all this stuff. And like you said, I put a 5% FHA on this property. So I only put in $35K. So after a year I had to refinance. So Frazier came out, cut window of my rent. They put my parents' unit at market rent. So through the refinancing, they dropped the rate a whole percent. What else happened? Oh yeah. And through the appraisal process, and this is the great thing about multifamily that I learned and fell in love with is that, okay, so comparison approach, let's buy some other fourplexes that sold in the last 6 months. This one sold for $750,000. This one sold for $775,000. I was like, great comparison approach. It went up like $65K. Great. And The best, the better part is they're like, okay, oh, so you raised your rent from $900 to $1,200. Great. That actually brings the value of your property to, in the income approach of the appraisal to, I don't know, I'm going to make up some numbers, $930,000. And so what we're going to do is we're just going to slap it right down the middle. So my property that I bought for $675,000 got appraised for $800,000, roughly, I think like $830,000 within a year. And the nice thing about that is Hey, how did I go from owning 5% of this property when I bought it to now owning 20, I think it was like 23%. The refinance, I dropped off PMI, I dropped a whole rate percent. I believe my payment dropped $800 in one fell swoop. And the fact that I didn't do any cash out, so it was all back in the property. Now I own 23% of the property. I was like, wow. I just made $100,000-something doing nothing. Obviously it's in net worth and equity, but I found that, that's still part of my net worth. I found that amazing. And definitely like dwarfed, not dwarfed my, my obviously day-to-day income, but I didn't have to work for it. A little bit of work, obviously with the renovation. So that's when I caught the bug. Oh, also, go to do my taxes for the first time. That's when I really caught the bug because I started making income and I was like, this is my income. That's how much I made, obviously in cash flow as the rents went up. And then my tax guy was like, no, you didn't make money. I was like, what are you talking about? Here's my rents. Here's my mortgage. Here's my utilities. Here are all my repair bills. I get that I wrote off stuff, but I still have some money over, like over my mortgage. He was like, no, we have something called depreciation. I was like, What the hell is that? We just take the value of your property and divide it by 27.5, we're subtracting that from your income. I was like, that doesn't make any sense, but sure. And I got the biggest tax return of my life while having my day job. I actually, I was like, I'm making money. I still have my W-2 as a software engineer and you're giving me money back. I'm usually paying into my taxes. I think I, my first year, I think I got a $5,000 tax return when generally I As a software engineer in the Bay Area, I'm putting out like $3,000 or $4,000 after just with my regular W-2. So I was like, this doesn't make any sense. You just gave me $150,000 in equity. You're saying I made money, but you're saying I didn't make money even though I have money in my bank account and you give me a tax return. So all this stuff together, okay, like maybe this is why the wealthiest people in the world own real estate.

It's that light bulb moment, right? Where you're like, oh my God, this is, yeah, that's amazing. So much stuff to unpack there. Okay. Just really quickly for someone that maybe doesn't understand the, the power of leverage and raising your rents and the income approach to value, do you want to just kind of unpack that really fast for someone? That's really amazing.

Like I said, I, for those who did absolutely no analysis, no thoughts, just I literally honestly signed blindly for everything. The income approach analysis, how do I unpack that? Honestly, I didn't really discover that until I did my first appraisal. You know what I mean? And like I said, I think it's basically, if you're getting a single-family home, your house is appraised on other comparisons. It's not on income, it's not anything else. That's how your appraisal's built out. On commercial, your property's appraised basically just completely on, I think it's replaceability or income approach for commercial. I'm not the expert on that, but I know that income approach is probably the bigger one in terms of appraising your value on your property. And like I said, luckily for me and having the fourplex, which is the, it's still within the realm of residential, 1 to 4 units. They do a combination of both. It's really hard to find comparisons. It's really hard to find other fourplexes generally within a reasonable distance range. So they have to find other approaches to come to a solid value. So that's why they do bring in, you know, a little, I don't know if they do it 50/50. Like I said, I'm not an appraiser. I definitely would recommend you bring an appraiser on the show to go through the details of one to four units in terms of how they weight income versus comparison approach. But yeah, like you said, I raised my income, my rents to market as quickly as I could. And like I said, that significantly boosted. I don't know the actual calculations, like that's always up to an appraiser, but I have a general, I can get a general range to figure that out, if that makes sense. But at the end of the day, I'm not a huge analysis person. I just tell people, you raise your rents, you raise the value of your property. It may be a lot, it may be a little bit, but it's always like, it's always the best. You raise your rents, then you're bringing at least whether you're cashflow or not, you're bringing more money into your bank account. And then it also raises the value of your property. That's more net worth. So why do I need to do an analysis when I'm already bringing more cash into my property at the same time? So I personally don't worry about net worth and that. I I keep an eye on it, but it's not, it's worth nothing until you sell or you get a HELOC or something.

Right. Or you refi. Yeah. No, I, that, that, I think that's really, yeah. The napkin math. People get so obsessed about cash on cash and all these metrics and it's like, you know what?

I'll say this about that stuff. I, I have a lot of investor clients and maybe I'm not the best analysis agent for them, but I've had some clients who bought their property, did the whole spreadsheet, pro forma, everything, and then The market changes and all the work that they did is just thrown in the trash. Not saying that analysis isn't important, forecasting isn't important. You should definitely calculate in a general percentage for maintenance, general percentage for vacancy, all these things. But just understand that if you hesitate and there's a good deal out there and you're doing all your analysis, you may just miss out. Just jump into, just jump into it and then find out. There's so many learnings. There's a million things in real estate. We could talk for literally dozens of hours about all the intricacies of everything, every situation. I tell my clients, don't try to learn every situation. You'll come, if it happens, you'll learn how to deal with an eviction. You'll learn how to deal with non-paying tenants. You'll learn how to add value to your property. You'll learn how to renovate better. You'll understand what materials are best for a rental. Just don't overload yourself. There's other things that lack in real estate.

It's true. And I think if we knew all of the ups and downs, we would probably run screaming maybe. But in the long run, it's such a good decision and you just eat. That's the best way to learn. When we were starting out, I was like, what's the mortgage? What's the rent? I didn't know any of the metrics that I know now. And I'm so glad I bought them. 'Cause you always look back and you're like, oh, I wish I would've known. 'Cause appreciation goes up.

So yeah. You just don't know. I'll say this, like I think that I always, luckily now that I passed that first property, I'm about 12 units out, but that first property, I think of it as being my MBA in real estate investing. You learn everything. I've had, let's just say, I had to wrestle with tennis, learn how to take my emotions out of it. I had sleepless nights stressing about why they do to me this and that damage, et cetera. And now, I still get a little threatened by it, but I, I definitely look at it, take a step back and analyze it from more of a business standpoint and understand I've been through this situation before. How do I deal with this? Or if it's a new situation, okay, I'm learning and this is the cost of, this is the cost of business.

Yeah. And the worst situations are the best stories, right?

Oh, I have plenty of those. I have tons of those. Oh my God. Oh, this is so fucked up. Like literally COVID happened, everything shut down. I had first tenants just run out on me, just straight up, just jumped in a car. My mom called me and said, hey, looks like the neighbors are selling everything below us. They're just doing a little garage sale and it looks like they're about to run away. And I was like, okay, they have 7 couches. Their unit for some reason and they had just left. I called them, they're not really that far behind on rent, but I'm just like, hey, you have a lease, can you come back and pay your thing? You can't just run away. They literally just jumped in a car and drove to Idaho. It was crazy.

Yeah.

Like that's very stressful situation. But you know what I did? I learned, I was like, all right, how do I salvage this? The unit was in pretty good condition other than lots of garbage, lots of trash. From the, they were tenants from the previous property management. And I just said, all right, time to put everything into garbage bags, dump all this out. Hey, look at all these couches here. Hey, I can't, can I do anything with this? Can I sell this stuff? Is this mine to sell? So I wrote, I was like, at least able to contact them. Here is a form. Please sign that all this stuff you left here on my property, I could, I'll do something with it. Ended up selling all the couches. For profit to cover their rent. It was fun. I'll just Facebook Marketplace, Craigslist, people coming and picking up couches from the unit. And then yeah, I just did a coat of paint. The unit was already pretty good and I raised the rent. Honestly, I think it was $850 on that one and raised it to $1,200 immediately, like with just a coat of paint. Maybe spent like $300 total. And I was like, oh, okay.

That wasn't as bad as I thought.

So, you know, little situations like that made me think, okay, you have to be on your toes and be flexible, adjustable, because things happen. People are unpredictable. Like you can kind of predict everything else in the property. Oh, interest rates are going to do this and this is going to appreciate this way and et cetera, et cetera. But people themselves are variable. People will damage your property. People will do some crazy things. People will lie to you. And so I like to take a step emotionally away from that and not stress myself out too much. Now that we're dealing with like our little units at this point.

Yeah. Uh, people are interesting and it is a people business, right? You're providing housing and yeah, I, I, some, I have this dream someday of having a landlord comedy show where we all get up there and just tell our stories.

Oh yeah. Oh my God. Fun. Like, like a standup comedian who only does Realtor jokes and real estate jokes. And it's just a, the whole audience has to be in real estate. That'd be fun.

Right.

You have to show like proof of ownership to get in. So, oh yeah, that'd be great.

Yeah. That's like, it's silly, but all right. But there's a lot to unpack. Obviously this is a long game and I, I, we obviously were both passionate about real estate, so I guess to switch gears, I think there's this debate on market versus off market. I, I honestly bought most of my portfolio on market with an agent. Didn't know what I was doing, but And I think there's a sexiness about owner carry and off market and all these deals, but honestly, I think those deals are hard to find. You have to do a ton of marketing and there's a huge value in working with an investor-friendly agent like yourself. Like you, you're gonna see the big picture. So I'd love to, if you can speak to that. That's just, I'm, I think people overlook working with agents some as investors sometimes, or what's your experience?

I'll say that I bought most of my properties on market. And there's ones that have been sitting for a long time where I could see the opportunity where, you know, my— and I have partners, our partners are feeling like, hey, this is an opportunity we can take on. This is scaring everybody else off. So there's a lot of on-market opportunities if you can handle some of the stresses. And if you have the skillset in terms of taking things on that other people won't do, like mass renovations, or you have a specialty, or like you can see a potential in a property, like This would be a great Airbnb, or this would be a good long-term nursing rental, et cetera. If you can find an opportunity, you can find it on market. So of course, if you can, like, on market is the easiest because it's right there. It's for anybody to see. Picked up properties on market and hey, in markets where let's say it's more of a buyer's market and properties are sitting. It's up to you to find the opportunity. Maybe people are thinking very short-term and not willing to deal with the current cost of a mortgage. So I'm very long-term thinking and saying, hey, yes, rates are high, but there's nobody here and I could go get $50,000 off on this property. So on market is totally fine. I've done a little bit of everything. And I also work with a lot of agents, so I'm, I feel like I'm pretty deep in the investor network and with the investor agents, and sometimes there's properties that they're about to list that hasn't gone on the market. It's like, here's a good opportunity. I actually just got, and I'll just say, I have a client friend slash family member that I found an off-market property for. They're going to list it, but this person just wanted to get rid of it. The seller did. And so the agent reached out to us and we were just like, okay. And the best part about in terms of on-market and Nothing's like, nothing like wholesale is traditional market. I got an FHA 5% down on the property for my friend at a great price with no competition. So I technically like off-market, but they're about to list it. Like where the communication and networking between agents, that's my best opportunity. And then, like I said, I've been through wholesale houses. I've been through all that and gotten the hard money. And let's just say everybody wants to jump into Oh my God. Like my first hard money, private money deal, that's a lot of money just over the next 6 months. Just, I think at the time we were paying like 10, 12% interest on a hard money deal. And you're just throwing money away for interest to get into these deals that you can't— that there's a reason why they're— it's a distressed property that didn't go on the market, didn't do this and that. You're going after people in distress and people who probably aren't taking the best care of their properties. So you're taking on a lot of risks with these types of properties. You're not potentially getting your full inspection. You're not able to do your best due diligence because you have to move quickly. And same with foreclosed properties, things like that as well. I would hate to put my client into a position where they have a lot of surprises. I will warn them. At the end of the day, everybody has their own decision on the risks that they want to take. I, before I did all those risks, I run into lots of deferred maintenance, new roofs, new things that I wasn't expecting, sewer lines. So the best I can do for my clients is just pre-warn them about the dangers of these off-market wholesale deals where you can't do the standard 30-day contract with due diligence. Versus, like I said, competing against the market. There's benefits to both. There's a reason why people do both. I like on market because I like due diligence. I want to give my client, my investor client, a good product the best I can. I want to get all our contractors out there to do bids on the things and also negotiate the price down. But like I said, with it being on market, you're competing. So basically if I can get in touch with the agent who has investment property before they list it, That is my absolute ideal. What's the number? Great. That makes sense for us. Let's go. No competition. Also, let's negotiate. That's, I mean, I know that's a really long-winded way of saying they're all good and they all have their risks, their pros and cons, but personally, I'll go on market all day, any day, because long-term real estate works out. And in times of low interest rates, you're going to probably overpay for a home. And times of high interest rates, you're going to hopefully find a deal and refinance later and get that good interest rate at another time and hopefully lower payment. Just have to think long-term and plan ahead. And the big thing I always mention, and I'm not the best at mentioning this quote, I know there's a Warren Buffett quote about basically jumping into a situation when the streets are filled with blood, if that makes sense. Like when everybody's scared, obviously you're going to be moving afford. This is the opportunity when rates are high, people are scared at the market. If you can afford it, jump in. Payment's not going to be fun, but if we can go get an amazing deal price point-wise, I always tell people the most money you're going to make on your property is the price point you get in at. You can get that amazing price point, have a payment that you can afford that might not cash flow, might not get you to what you want, right now, but if you're patient and the rates drop to 5.5% and everybody's running into the market, then, hey, I have this amazing property I don't compete with anybody with. I didn't have to refinance it and get the low rate, get the low payment. You've been doing work to get, keep the unit in shape and get the rent. Hey, you have a cash flowing property within a year, 2 years, whenever the rates drop, obviously.

Yeah. Done. No, I totally agree with that sentiment. I think in general, a bad deal is worse than no deal. And I think people get this dealitis and they just, they think wholesale. It's, and to your point, these are not well-maintained properties and you start opening walls up and you start finding things. I bought a property off market. We didn't do our inspections of nor— there was the toilet literally wasn't hooked up. There was no sewer line, like things like that. Oh no.

It's So I, yeah, I'd say there's dangers at the end of the day too. There are dangers with off-market as well. It's not like the inspectors are opening up the walls.

Mm-hmm.

Right. You may get contractors who care. You're basically seeing what's external and what they can, you know, stick a camera down into and see if there's any moisture. But there's still a lot of dangers, especially with older homes. Like for me, oh my God, as soon as I hear galvanized plumbing, I Not that I run in fear, but I'm just like, okay, like plan for that cost. Those, that's going to come up at some point, or maybe not. You just never know. It could last 100 years. It could last another year. Who knows? But I've been in a lot of those situations. And like I said, all that comes through experience of like dealing with that myself. Having properties as old as 1940s all the way to my newest property is 2020, which I like. Not having to worry about galvanized plumbing and a lot of those other issues that may come with older homes.

Yeah, no, they're, they have tons of charm, but with that charm comes a lot of old stuff.

Can I say, I'm, I'll be honest, I might not be the best agent for Portland houses with charm. I'm born and raised in Northeast Portland. I grew up in a 100-year-old home. I personally don't like older homes. The layouts are all strange and Yes, there's the stained glass windows and the interesting, I don't know what the word is, beauty to these older homes that people love. I don't know if I can appreciate that personally, just because I distinctly remember as a kid, and we had an older home and my parents, my family wasn't the best at maintaining our home, walking downstairs into our basement, my nose immediately clogged me up, probably because of mold, and then coming back up. And I'm just thinking with these older houses, There's so many scary things that could happen in a house that's 100 years old that you'd never know, like secret leaks and the way they constructed it just wasn't up to standards. So like you said, I could forewarn my clients about all these things. And I mean, at the end of the day, there's way more problems than you're going to expect. And the seller's never going to be that happy because they thought they maintained this house to the best condition. So That's, yeah, older homes are not my favorite, but we can get it to work at the end of the day, as long as they know what they're getting into. And I've let them know and let them know that there may be a lot of other things because I can't open up the walls and tell you what's going on behind there. And neither can the inspector. Those are the things you're going to have to do to be in a trendy, urban, nice area with a 100-year-old home. There might be mold growing out throughout the siding for the last 40 years, but hey, that's what we deal with.

Yeah, I do think inspections, and that is something like speaking, I have a whole soapbox about wholesale deals, but I think it's so important to do your due diligence and know what you're getting into because, and again, they can't get behind the walls, but they will find stuff that you just, you're not gonna see. And that's what they poke holes in everything.

Yeah. That's the thing is if you're gonna overanalyze a wholesale deal, But you can't calculate it and I have to replace all the galvanized plumbing. That's going to cost me 15 grand. I don't have to. You don't replace galvanized plumbing unless you really have to. Like, why preempt yourself? You just let a pipe burst and then you're like, all right, I got to fix this at some point. But that's the point that you miss out when you, like I said, I don't want to overanalyze any deal in general. One, like I said, if it's an amazing deal and it's making somebody tons of money, why are they selling it? You know what I mean? That's what I tell my clients all the time. So like, they're not in the business of selling your properties for you to make money. They're in the business of selling property for them to make money. So at the end of the day, and I get so many people on BiggerPockets who reach out to me and they're like, I want cash flow. I want this. I'm just like, okay, like we're in an appreciation market and it takes patience to get the cash flow. You want cash flow, go to Indiana, go to here. I can find you a great agent out there to go find you cash flow. And this is the thing I tell them, that's very short-term thinking. Cash flow is the smallest part I care. I have a good amount of cash flow. I get the passive income. I can live off of it, but I could care less. I like to work. I like to sell houses. That's where what I'm living off of. But let's say you get great cash flow in, I don't know. I don't want to hate on any of these states, but I don't know. Iowa. Let's go to Iowa. Let's go buy this property. The cash flow is right away. Great. Hey, it's a 100-year-old house. This house hasn't appreciated in 20 years. Great. So I have no appreciation value. Pipe burst. Oh, a pipe burst costs the same over here as it does over there, basically, probably. All your cash flow is gone. I hate short-term thinking. I just need cash flow. Like, you'll get there. There's opportunities. And I like where we're at. I think we're in one of the best markets on the West Coast. I know that people don't like our politics or this or that or et cetera. But if you think about it, I lived in Seattle. Way overpriced. Can't— people can barely afford anything there. I've lived in the Bay Area. LA's too expensive. San Diego's too expensive. We are the cheapest major city on the West Coast. I think we're on par with Sacramento. We have good appreciation. And like I said, if you are patient and can find a deal and jump in when you can get at a good price point, which is— it's the opportunity market. Try to get a combination of both because when rates drop, there's no way you're getting a good price. People are, like I said, when you get the people bidding up until I could deal with putting out a little bit of money out of pocket every month. That's what's— people start making these, uh, what's the word? Concessions in their head about what they do to, to just to lock in that low payment.

Mm-hmm.

Hey, I'll bid it up at about $50 grand. That's what happened in 2021. Like how much do those people have? Growing equity, not a lot. A lot of them have negative equity. Yeah, they have that great payment, but hey, remember when you sell that house, you might've lost $100 grand, $50 grand if you try to sell in this market. So just be patient. And like I said, think long-term.

Yeah. I—

opportunity.

That whole debate in your own backyard versus out of state. And I'm in your camp. I think appreciation, I think quality of life being desirable. It's all about leverage that people get so caught up in the cash flow and So it's, I think it's really important and it's someone you're not there. You don't have boots on the ground. I think you have to be very careful with out-of-state, but that's just me.

I don't know. I don't, I'll be honest. I don't even like, I have some of my properties under Property Management. I don't even like, I'm local and I don't even like how it's being run here. So just imagine it 5 to 6 states away. I can't put my head in and not that I'm a micromanager or anything, but here I'm just, I can at least push, I can at least go check it out. What's What's going on? Why is this not being dealt with? And is this really the price you're charging me for this? Like, I, and I, we have our people, we're obviously in real estate. That's ridiculous. So to put it, put a property, get a property way out there that you are putting under property management where they probably have their contractors who, let's just say they have a, like a deal or situation with, and with non-educated investors, Sure. Yeah. That's the price to fix this. Like you could really start to whittle away your capital really quickly. But like I said, it's start in your backyard. Yes, it might not hit your cash flow numbers, your this or that. It will. Just be patient. Real estate is, like I said, I mentioned all the other benefits, the tax benefits, the depreciation, all this stuff. Paying out of pocket a little bit, it's still, you know, you're still putting money towards your principal, or somebody is mostly paying your principal, if not all of it.

Exactly.

Over time, these situations will change. Just have to put your head down to the market, listen to your experts, listen to your lenders, your realtors. And if there's a good opportunity in market to sell, refi, rent out your house and buy a new house, take a listen, run your numbers then, because that's when your property that, hey, might not have been quote unquote, the best deal, it's gonna be a great deal.

You pull that equity out of it, you're like, oh damn. That's the power of real estate if you want to, if you choose to. But yeah.

Oh yeah. Yeah, exactly.

Yeah. Oh man. Yeah. I was gonna say something. So yeah, so I, yeah, I think we're both, I think it's just you have to get started. Don't overanalyze. Like you might have to feed it a little bit, When I think about my first rental, the rent was like $600 and then I raised it to $800 and I felt like I was pushing the envelope. And now it's like almost $1,900. And that's just the trajectory of rents, you know?

Exactly. I've almost doubled since 2019. That first fourplex, I always talk about that. I've bought other properties since, but that one I bought from $900 on average to now it's $1,600. Cash flow like $3,000 a month on that property alone, has $400,000 in equity just on my guesstimation.

Yeah.

In 4 years, 5 years. Oh, and I have other examples of some of the other properties I bought with partners since that I've obviously forced that appreciation, raised the rent. I know when I get an appraisal, I was like, that's $500,000. You know what I mean? So there's a lot of ways you can do it. That's where you find the opportunity to, to buying future money, not money right now. Like you said, they're selling it for a reason. They didn't want to take care of it. There's a lot of deferred maintenance, et cetera. We spent, me and my partner spent, oh my God, probably $130 grand fixing up one, the second 4-plex that we bought. I bought with a partner. Got the tenants out because their rents were vastly under market. Spent about $110,000, found other stuff. Oh my God. Replace the roof. We've got a $30,000 plumbing fix now. So that brings it up to $130,000. Getting all those units all up tip-top shape, but we brought our rents from $1,100 to roughly $2,000 a month in one fell swoop. And like I said, if you get that appraisal now and you're like, hey, before you were bringing $1,100 a month per unit on a foreclose and now you're bringing an extra $3,600 a month, how much do you think they're going to value that property at? I'm pretty sure that property's up at least $400,000. Yes, they put $132,000 in, but it was worth it to solve a lot of problems that are going to continue to degrade our property. Plumbing leaks, we're getting, like I said, $30,000 plumbing leak, replace all the galvanized plumbing, replace the roof so it doesn't leak in, cause mold, do all this other damage. So when we do sell it, at least that's— you're, yes, you're paying, I'm going to say a number, $30,000 for a roof now. But hey, if I didn't fix the roof and I went to go sell it, And the roof needed to be replaced. Guess what? That $30,000 is coming out anyways, and it might've caused more issues. So putting that investment into my property, yes, it hurts now. It is painful. I'm— I want these units to be in good shape and bring me cash flow for a very long time. And when I do sell, I'm hopefully going to get around the price point that I want instead of being whittled down on all these little— all these inspection issues.

Mm-hmm. Exactly right. No, I, I feel like a lot of times I'll see off-market properties and they, the rents are well below market and the tenants are afraid to say something. They don't want their rents to go up and then it's not maintained and it just really spirals. It's just like you have to charge market rent as a landlord because you have to maintain things and it's expensive and we have unforeseen, like roofs, that's expensive. So yeah.

Oh yeah. And I have my own philosophy on it. I, if I have good, consistent tenants, I won't, I never raised rents to the max. I think max rent raised in Oregon is like 10%. I've never gotten anywhere close. Like I said, if I'm happy, because at the end of the day, a vacancy is, let's say I raised my rent $50. Yeah, there's no money coming in. If I raised my rent, let's say that full 10% and they leave, okay, now I gotta fix the whole place up and I gotta put this on the market. I might've lost 2 to 3 months of rent, maybe longer.

Mm-hmm.

Just over $50 versus $150. I might as well just raise it the $50, the bare minimum. And obviously there's inflation, there's reasons to explain that.

Mm-hmm.

Keep the tenant that is paying. And when they want to leave and move on to the next part of their life or they're growing a family or whatever, great. And then get it to market then. I, I don't want to force anybody out just for, you know, my own benefit or be a slumlord that's going to max out. Rent raises. Like a good tenant is a good tenant. Be happy with them. Work with them. Like I said, take care of, make sure to like obviously be wary of your property and what's going on and take care of the issues that are coming about. 'Cause you don't want them to spout into bigger issues like a toilet leak. Deal with that right now because that's going to leak into the subfloor. That's going to mold. That's going to get into the crawl space. That's going to, there's a whole spiral of things that can go wrong. That I'm just like, take care of your property. Like I said, I'm— take care of your property. Take care of your tenants. Things will come if you treat people well and do things the right way. And this is less analytics and less trying to maximize your profits and just try to be a good person and do the right thing. That people will reward you. And sometimes they don't, but most people will reward you by taking care of your place and being honest and working with you. And you're, you just all help each other rise together.

I, I totally agree. I firmly believe everyone has these horror stories of tenants, but if I've never gotten a 2:00 AM toilet leaking call, that's the classic, right? And I think if you maintain your properties, have quality properties, you're communicative, you fix things, tenants respect you. It's a very beneficial thing. It's not like this you against them. Landlords have such a bad rap, especially in Portland, man. It's really I used to not talk about being a landlord, right? Because it was like, oh, I'm evil landlord. No, like we're providing a service. I think it's important.

At the end of the day, housing prices are being pushed up, not just by us, but just regular home buyers. People come from out of state. Yes, investors. We, my family, we're in, my parents are immigrants from the Vietnam War. We came with nothing. So I want to build our generational wealth to take care of my family. And like I said, I provide housing and I try to help my tenants as much as possible to move on to the next step. If you can't afford a house or whatever, let me help you out. It doesn't have to be me as your agent. Just let's, let me help you move on to the next step. But there's always a stepping stone and I'm always for affordable housing too. If we have good programs that make sense, that provide affordable housing for people to purchase that are low income, then great. That's also a great solution. I don't want to be like a gigantic slumlord who has all these properties and forcing people to live in my place and taking away opportunity. We're doing, I'm doing just fine on my 12 units. I don't need to go gather 1,000 and I don't know, build and make multi-millions of dollars and push people down. I want everybody to succeed. This is still me taking care of my family, taking care of my parents' situation. Like I said, they lost everything and I'm still digging them out. Making sure that they're, they have their expenses covered and that if for any health emergencies, I have properties to potentially sell off to cover a major expense or just cover their living expenses. So that's what I work towards. It's beneficial for me to provide housing and it's also beneficial to work towards being a good landlord so I can build that cash flow to take care of my family. And that's, that's the best part about real estate.

It really is. I, I wish the local laws saw it that way. Like we're really, yeah, we're good people. But yeah, I think that's really the right attitude and, and I think that it is an important, I think independent landlords are really important. People do wanna often live in single families and have a yard and have, I was, when I'm talking to someone, I'm like, I'm independent. I have software, but if you message me, I'm gonna have some, my team's gonna come out and fix that. You're not going through this corporate phone tree to get a repair done. So, yeah, I think it's super important.

And there's a whole thing. I, I have some properties I manage and some properties at this point too, I'm a little overwhelmed. I got a lot of projects going on. Gotta sell real estate as a realtor. I started moving towards property management, but obviously vetting and making sure that they are taking care of my tenants.

Mm-hmm.

You know, you have to have a pulse on who you're hiring to take care of your places. Cause I just personally can't handle it and I don't want to handle it. Just at the end of the day, we're trying to build passive income. Passive. That's why I— and I've touched a little bit of everything. Short-term rentals, my long-term. For short-term, I, I decided after a year, I was like, I don't wanna do this anymore. Like the money is not worth it personally. I, I'll be completely honest.

Mm-hmm.

Mm-hmm. I made a lot more money for a lot more personal stress and dealing with dealing with people, I don't, let's say dealing with people through the app or them complaining about things that just made my blood boil. And I was thinking to myself, is this worth the extra $2,000 over the month? And I know that sounds ridiculous. Most people would deal with that, but I decided I don't want to deal with this. I'm going to pay property management, go ahead, take your 25%. I don't want to think about this property ever again. There's pros and cons. Like I manage my long-term. Rentals. Okay. So that's a little bit more straightforward, less day-to-day complaints or issues. And I can always just, hey, here's my contractor, schedule time with them, figure it out. Let me take care, obviously replace these appliances, do this and that.

No, I had STRs and it was like something would break, I'd have to go buy a fridge, right? Because there's no leeway in repairs or an aunt would show up and I'd have just the high maintenance communication was exhausting. So I'm interested, you outsource your STR management and you do your own long-term. Is that kind of how you split it up?

Yes. So my first two, my first fourplex, I still manage that. I mean, honestly, I'm getting, I'm going through an eviction right now. Like I said, there's, there's pros and cons to things happen. It's a bummer. I think I might be scaring people off with this $30,000 plumbing fix and the, the $30,000 to spend on a new roof like a year or two back and all this stuff. It happens. But yeah, I try to manage my long-term because it's simple. It's, they're all local. I have my fourplex in Vancouver. I have my fourplex with a partner in Hillsboro. My short-term rentals, like I said, I just didn't want to do the day-to-day thing. There was a time when if you can't get a cleaner out, you can't do this. I would have to go and wash the sheets. When at the house in Troutdale. Yeah. 4, 4 bedrooms. One is, one of the bedrooms is 2 bunk beds. So I have 4 sets of sheets. I'm there, the cleaning. Yeah. The cleaning is 2 hours.

Yeah.

The cleaning is 2 hours, which is fine. But then I'm sitting there for 8 hours watching 3, 4 movies cuz I'm waiting for laundry to dry. I have like this—

Yeah. And then the stink, the sheets are stained and then you can't have, yeah, no. It's not even—

Oh my God. So I just decided, you know what, I'm going to let a professional deal with this. It's fine. I'll take the hit on the property management. I just, my personal life should not be doing— I don't want to context switch all the time. I don't want to be, I need to be an expert in cleaning. Now I have to be an expert selling real estate. Now I have to be an expert in dealing with my long-term rentals.

Yeah.

So I'd rather just, okay, I'm going to focus on what I'm good at, which is helping people buy invested properties and their first-time homes too. But I always think of even their first-time homes as an investment. They're not going to think about it. Yeah. If they're not going to think about it in that lens, at least I'll, I will give them the pointers about that so they can add that to maybe their decision-making process outside of just, I love this house emotionally. Is this your starter house? Is this the house you can rent out later? I tell people, keep your homes. Like I could go Make a killing telling my tenant, telling my clients, yeah, sell your home. We'll buy the next one. No, keep it. So I tell people, I don't push too hard on it because if they want their dream home now, go ahead. But if you guys are willing, you're starting your family, hey, this is not the house for you forever. This is what you can afford. Let's get rental grade, live in it for a year. Maybe next year, get the next one. Don't have to sell it. Have your assets, get your rents in. Your rents will grow over time. Your property will grow over time. You can refinance at opportune times. And hey, that may be a cash flowing property. Equity that you could sell and net some capital gains. There's just, there's a lot of things you can do by just holding assets. So as your podcast is named, you know, that was ChatGPT.

I have told that to people. I'm like, don't sell your house. Just if you need to refi to get money out, like that's how my first house bought two houses and then the next house bought another with equity. It's just the people are so afraid of being landlords. Do you hear that a lot? I feel like they're, oh, what if the toilet leaks? Or what if the tenant, I don't know, like all the what-ifs, but it's such a good advice. Oh yeah.

You don't want, I leave it, I tell you really don't want to deal with it. You're calculating property management, how much is that gonna cost? They're gonna be dealing with, if you really don't wanna deal with one tenant, right? No, like you said, it's, I'm there long-term. Like how often do you think your tenant's gonna call you? They don't wanna talk to you. They wanna live their life.

Yeah.

Yeah, that's just how I think about it. Yeah. You like, things do happen. You're self-managing, you may get a call here and there and deal with it, but it is a lot cheaper than property management. But you absolutely don't want to deal with it. Go ahead and get property management. Tell them, I don't want to know anything. You just give me my check every month. Take your time. Go ahead. And people are still cash flowing, still making money at some point. But if they had their house for a while, they're probably going to cash flow if they locked in a good rate, good payment. Take advantage of that. People have had their house for 10 years and they're looking for their next house. I'm like, this payment is ridiculously low. Why would you give that up? Just put somebody in there, go fuck your $1,000 a month. If your lender says you can afford your next place without, without having to sell, then do it. Because I could go ahead and make 2 commissions, but here I'm making you 1 commission because I know when you start making money, you're going to tell the world about me. That I made you half a million dollars. You know what I mean? That's our value as realtors is that we make people money. Yes, we cost money, but we make them a lot more money. The smart ones do at the end of the day. Right. That's, that's a whole nother conversation.

That's a whole nother conversation. I'm not licensed. I'm really on the fence, but I, so I have to ask the current politics, right? The current judgments that came down, your two cents on that. Just, I'm really curious.

I say, I'm not scared. I've only been a realtor for 3 years, but like I said, I think I bring a lot of value because I touched everything myself personally as a realtor. FHA, I've done conventional primary. I've bought invest— bought with an investment loan. I've bought off market. I've bought, geez, I just did a seller finance lease option, just like all this weird stuff. I, provide value for my clients. And I will say this, I personally think that 2.5% is a living wage. Most realtors don't make money. Most, I think it was, I don't know the stats, but let's just say a ridiculous amount of realtors only sold one home or less. And there's only, what's less than one? Absolutely zero homes. So there's very few people making most of the money in the industry. So 2.5% and like, The news is always saying, oh, the end of 6% commissions. 2.5% to the seller, 2.5% to a seller's agent, 2.5% to the buyer's agent. That's basically a living wage. Half a point or a point for covering photos, et cetera, whatever. That is just the cost of buying and selling a home. It is what it is. It's not that much money. People have to— people don't sell that many homes in general. So 2.5%. Maybe $10,000 on a $500,000 house minus your brokerage costs, all these other things, you're maybe netting $7,500, $6,000 on a lead that took you like 7 years to get. Because people switch houses every 7 years, roughly. I think that's the timeframe. So like I said, we're not swimming in it in terms of finances. So at the end of the day, if you need a professional, to your home and give you all the advice, you need to pay them a living wage. And the best ones are obviously going to grow a great business. So for me, I know like how much value I can add because of through my experience owning real estate and flipping and fixing houses and renovating and all that stuff. I know how much things cost. So I add a lot of value outside of just opening up the door. You got to negotiate. You got to be the poker player. You got to be the poker player for your client. And a lot of people, and like I said, there's a bad rap for agents for a reason, because there are, there's too many agents not doing their job, not learning the skill sets, not getting any education. So a good realtor is worth their weight in gold. That is what I say. I'd say worth even more than the percent we put out there. Um, so this whole thing, yes, there's going to be a, what I call a spiral and drive down to the bottom where there's going to be a lot of discount agents who are going to say, you don't have to pay your buyers. You don't pay your buyer's agent. Like, what incentive do they have to show your house? There's going to be a lot of sellers who are just going to be like very short-sighted. I don't want to pay that person. Hey, when you have less people coming into your home to bid, to actually come in and compete against other people, then you will get a lower price. So that 2.5%, you probably lost 5, 10% of the your home value anyway. So I think a lot of short-sighted people are going to lose a lot of money and the people who provide value long-term are going to be just fine. So I think long-term with my clients, I talk my clients all the time. I talk my clients out of buying if it doesn't make sense to them all the time. One, luckily we're in the passive income game and I can live off of my passive income, but I just think if I do right by my people, I'll get all the referrals in the world to build my business. I really truly believe that. So I never force anybody to buy a home. I'm never commission hungry. The best agents are not commission hungry. They're doing just fine. And so this whole change, I can say we stick to our guns. We don't want to be the discount agents. We don't want to be the desperate agents. We want to be the agents that help. And we need obviously a wage that makes sense. And hopefully our clients understand our value. So we're going to be finding high value clients that are willing to pay us what we consider to be a living wage. So at the end of the day, I'm not scared. It's about finding the right people to work with. There's enough people who are going to buy houses, who are going to value you to build your business if you're a realtor. If you're doing, obviously, if you're actually providing value. So that's where education and learning comes in. And I'm very excited for those, for a lot of the agents to leave who are not choosing to be educated and thought this was easy money. And for a lot of the new agents who are like willing to take on this challenge, because this is not easy business. I left software engineering to do this. I make a lot less money as a realtor than I did as a software engineer, but I love the freedom of this is my business. This is what I'm doing. This is how I help people. And I'm very good and I know what I'm talking about. For, like I said, for the— probably not a great thing. Like I said, there's going to be some challenges as people get used to situation, like I said, there's a drive toward bottom and a spiral. It's just about the good agents to turn around and say, hey, do you really expect me to do this free? That's the conversation we're going to have. Then probably not. You're probably not the client for me.

Yeah, totally. I think the value of that experience, because it is a very intimidating process. And if you get into a bad house or you don't do your due diligence, You're, it's just, it's, you need to be careful. So I totally believe in the value and I think that, like you said, the people that are bringing value are going to rise to the top and continue adding value and helping clients. I've seen the discount agents, I've had leads from discount agents that couldn't sell on market and I really wanted to call them and be like, you did such a disservice to your clients. You didn't coach them on all the curbside appeal and how to stage. And I just You get what you pay for, right?

Yeah, those are the scale. I mean, they are willing to take the bad reputation because they just go on scale and there's always a market for cheap agents. Always a market for people who are not going to think long-term, who want to save now and miss out on all the opportunity the property could have gotten from good marketing. As you know, from both of us working in marketing, if they're not, if they're going to charge you 1%. How much work are they going to put into your property to market it, to put it out there and sell it? People are going to like it, that it's, it's not going to trick people into your home because a lot of people take beautiful pictures, wasted everybody's time because they went to go check it out. Wow. That wasn't like, what was the point of that? You think you were going to trick us into writing a contract because the pictures were so good?

Right?

Like it just, it doesn't make any sense. So like you said, those people, like I said, their margins are going to get squeezed even more and more, but they are going to contribute to, let's just say, a lot of hard times for a lot of agents as they navigate the situation. Like I said, there's just going to be a seesaw, a lot of seesaws of changes that are going to happen from this, from this settlement. And luckily, I'm, I'm, I know I'm able to weather it through owning real estate. So that's the best part. So if I make no money the rest of the year, It's not gonna be fun. I will be just fine and I can stay in this industry and adjust. So it's okay.

Yeah, no, I think that is really valuable insight and yeah, it's gonna be a good shakeup. I think it's just gonna, and hopefully reaffirm the value of agents and what they bring. I think, 'cause it, yeah. This has been so much fun. I think we can go on for a lot longer. Let's try to wrap this up. Sorry, we went a little over. So I have a couple questions I like to ask everyone. Top business or life advice to live life on your own terms?

I think for me is just best business advice is stop context switching so much. I think that's the best in terms of business and in terms of life. The most money I was ever making was when I was— obviously terrible life advice, I was Airbnb, renovating my property here, being a realtor and selling houses, and I was context switching. And I think like you lose like 30% of your brain power every time you switch context, you know? I'm sure I was doing other things too, like girlfriend, et cetera. But I'll say this, I had a mental health crisis. But yeah, my advice is not context switching as much because yes, I was making a lot of money, but I was so miserable. Life is not worth living just to make money. So one of the things that I learned, so I cut out a lot of those things. Obviously I finished up the renovation. I quit my day job as a software engineer and I just focused on being the best realtor I could. And it's made me so much happier. My business is growing. Properly by doing the right thing. Like I said, always do the right thing, always do the right thing by your clients and focusing on their interests and your business will grow. But yeah, in terms of business and life advice, focus on one thing. Don't context switch as much as it can be, like I said, super detrimental to your mental health. Everybody wants to do all the things that make this cash on cash return and do this and et cetera, et cetera. I say if I do one thing really good and I become the expert in that one thing, then I will do just fine. Having, being ethical and having focus is really important.

That is, yes, I, 100%. That's really important. There's a lot of shiny objects out there.

Thank you for that.

Exactly. There's that silly quote, the riches are in the niches or something like that, right? Like that. Focus. All right. Next question. What is your superpower?

Oh my God. What is my superpower? I think my ability to take risks is, uh, my superpower. Like I said, I've transitioned. I'm on my third career. Like I did not get a CS degree. I got a business degree at University of Washington to get into marketing. Did that for 5 years to get to be a, a marketing manager, internet marketing manager in the Bay Area in tech. And then I dropped everything to go to a bootcamp to learn software engineering, which is typically something you do with a computer science degree, whether it's your undergrad or your master's. And it's not an easy industry to get into. So I was able to do that and had a, a long