Investing in the Midwest with Tyler J.

Will my investment strategy pay off in 1 year? 5 years? 20 years? Tomorrow? Never??

​Hello hello Jump In Nation! We've got the very-own creator of this blog as our first #JumpIn Stories Interview. So...that's awkward. Time to get used to writing in the 3rd person. But anyways, this is the first in a series of Real Estate Investor interviews, where we'll profile individuals who have jumped in to real estate investing. They've taken a chance and are doing everything they can to create a life of financial independence. So, with that, let's Jump In!

Tyler, tell us a little about yourself.
I was born and raised in the San Francisco Bay Area, and apart from a short stint in Southern California for college, have been here my whole life. I currently live with my girlfriend in awesome Oakland, CA and work in The City (San Francisco) in the world of college athletics. I love the outdoors, photography, my friends, family, and talking about real estate, finance, and person growth. I question everything and try to figure out the root of how and why things in this world work.

Where do do you live? Where do you invest?
I live in the beautiful (and EXTREMELY expensive) San Francisco Bay Area, but invest in Indianapolis, Indiana.

Why did you jump in to real estate?
It's pretty clear that there's great financial potential in owning rental property. It really hit me hard a few years ago when I was paying $1,300/month to share a home with multiple roommates. Yes, location was a key factor in why my rent was so high, but again, it proved the power of rental property. By the time our lease ended, I remember mentioning to my landlord that she made $66,000 off of us over a year and a half. She joked that it paid for her children's college...but it really did! I needed to get on the other side of the table, become a landlord, and start building a rental portfolio ASAP.

Living in a 3 bed/1 bath with these guys was fun! But, paying $3,900 a month for the place? YIKES.

I know it's not going to be a piece of cake (and it hasn't been!), but monthly rent checks rolling in and appreciation can set you up for a bright financial future. That's why I am so focused on adding income streams. Ultimately, I want to continue to increase monthly income, decrease my monthly expenses drastically, and road trip the US in a van! #VanLife for the win!

I've also grown to love the numerous aspects of real estate: acquisition, inspection, renovation, marketing, efficiency, systems, different strategies...it truly is like running your own business.

What's your investing strategy?
I invest out-of-state where property acquisition prices are much more manageable than my local market. I make sure each property I own is cash flow positive, so even if I may not be getting amazing appreciation, I'm bringing in monthly profit. Simply: I buy and hold properties that cash flow.

Why do you invest outside of your local market?
I touched on this a little in the previous question, but the biggest reason is property acquisition price to rent ratio. Basically, I can get a cash flowing property that brings in monthly cash flow. The rental market is also very strong in Indianapolis, so there's a lesser chance of vacancy issues. Population growth, and job growth are also steadily increasing, which is a great sign when selecting a market.

How do you invest in long-distance real estate?
It comes down to your connections "on the ground." You need STRONG relationships with people you can trust. After all, this team is part of your investment. Literally. They are just as impactful to your return on investment as the actual property. Unfortunately, I've learned the hard way, so be sure to properly vet your agents, property managers, contractors, etc.

Visit the market you want to invest in. Meet people face-to-face. Broadcast your vision, goals, and  priorities so people know what you are trying to accomplish. 

What's been your worst moment as a real estate investor?
Wow, this is still fresh in my mind. I would say it was the moment I got confirmation that my 1st property was vacant and had a lock box on the front door. Why was this my worst moment? Because I found out about this reality without any communication from my property manager. No email, not phone call, nothing....

What? WHAT!? WHAAAATTTT?!?!?!?!???!!!

And the cherry on top? The property technically wasn't completely vacant....there was a squatter in the garage....

Technically my property wasn't vacant with a squatter in the garage.

​What's your one takeaway from that moment?
Do thorough due diligence when selecting a property management company. Vet a number of property managers, interview them, ask them questions, really lay down the interrogation. After-all, these are the individuals that are running your investment day-to-day. If ANY red flags pop up, it may already be too late. As the saying goes..."Hire slow, fire fast!"

Also, build your real estate network! How did I find out about my property being vacant? I got a tip from a connection I made online. Then I sent a 3rd party property manager to immediately investigate. They are now taking over management of this particular property and we're working to turn things around.

How has real estate changed your life?
I have a clearer vision and path toward the life I want. I see the great power of real estate, whether it's buying rental property, flipping it, or wholesaling, etc. And I see that it's something anyone can jump in to. I realized it's tough to retire early by just socking away a little savings here and there...you've got to diversify and find additional ways to bring in income.

If you had an extra $100,000 cash right now, what would you do?
I'd buy three more rental properties in the $100,000 range (that's about $25,000 down each). They'd also have to cash flow $200+ each. Then, I'd throw another $10,000 in savings and $15,000 in Wealthfront.`

What's the best book you've read recently? Why?
Do audiobooks count?? I just finished The Millionaire Next Door. Now, this won't be an edge-of-your-seat type of book, but it's a fascinating piece of work on what the world's wealthiest individuals have in common. One big thing that stuck: the world's wealthiest people...are NOT the ones driving the brand new Mercedes, do NOT have the nicest suits, or the diamond watches. Nope, it's more likely the guy next to you on the bus taking public transportation to work. Because he's not increasing spending as his income rises. He's not picking up that $550 per month car lease after a promotion. He's putting his money into appreciating assets and staying way far away from expensive material things. The image of wealth in our society is totally skewed in reality.

What's your end goal?
​This is still very much TBD. Who knows what my priorities will be in 2 years, 5 years, 3 decades? BUT, I'm looking forward to becoming financially stable in all areas of my life so I can take more time to work on the things I want to pursue. And of course I want more time to hang out with family and friends, and TRAVEL at will.

Exploring Mexico

​What's your greatest piece of real estate advice?
Build strong connections and relationships with individuals of various degrees of experience. Meet investor vets, talk with newbies, find people who are in a similar situation as yours. This group will help you through your investing career and be your guidance group. Life and investing is all about connections. It's soooooo cliche, but NETWORK, NETWORK, NETWORK!

Also, you better completely understand your numbers!

My first property in Indianapolis, Indiana

Thanks for reading everyone! We'd love to hear your feedback on these interviews. Are they cool? Valuable? Lame? What questions would you like to hear?

Let us know in the comments section below!

​-Tyler

READ: MY FIRST PROPERTY