From Night Shifts and $200K in Debt to Financial Freedom in 5 Years

this is the Bigger Pockets podcast show 836 what's going on everyone it's David Green your host of the Bigger Pockets real estate podcast the biggest the best the baddest real estate podcast in the world every week bringing you the stories how-tos and the answers that you need in order to make smart real estate decisions now in today's market and we have got a show for you today Rob and I will be interviewing Lindsay duay who is a multif family operator small multif family operate a little bit single family mixed in there she's done a lot of things but she's done well with the Burr method and longdistance real in investing two things that we both know that I'm passionate about and she's proven a lot of people wrong along the way Rob what are some things that you think people should look out for in today's episode listen I think for anyone that's at home listening to this podcast if you have reached a plateau in your real estate investing journey and you're trying to scale and you're trying to figure it out and you're struggling with it this episode going to be particularly impactful for you because we're going to uncover some of the secrets that Lindsay uses to scale her own portfolio but on that note David what's one thing that's fueled you that people have doubted you in you know I've been hearing for years uh hateful messages in my DMs shade thrown my way that I will never have a beard like Brandon's and I finally said enough is enough that I'm going to prove the doubters wrong I'm going to show them that they are wrong about that that in fact just because I don't have hair on my head does not mean I can't grow hair I'm going to grow twice as much underneath my chin and that's what I've gone and done well I wouldn't say I mean twice as much would be like a 8ot long beard I feel like no not twice as much as Brandon twice as much as I would normally have on my head you got to run your own race Rob well hey you know it's it's a marathon not a Sprint yeah before we bring in Lindsay today's quick tip is simple do your homework before you partner we often talk about Partnerships and they're portrayed on many podcasts as if they are this catchall magic pill that will solve all of your woses but many Partnerships can make things trickier and more problematic rather than helpful and be sure to listen all the way to the end of today's episode because Lindsay is going to share with you her four questions she asks every partner before committing Rob anything before we bring in Lindsay no no just that uh now nowadays I'm thinking about uh starting a little side hustle raising peacocks and you'll soon find out why that's exactly right if you want to learn a little bit more about the Buy and Hold peacock method we're going to get into that soon lindsy duay welcome to the bigger pocket podcast how are you today I am excellent how about yourself excellent I can't quite say I'm that good I clearly am the number two in this equation but I'm doing pretty good Rob how are you I'm doing really good I'm doing really good I got 10,000 steps in and we're only halfway through the day so I mean there's many more steps to come oh you're not going to become one of those people are you that counts that as a workout I track it a lot I just need to know tracking is fine but is it a substitute for your workout well it's a pillar of wealth I'll tell you that there's nothing against the Fitbit people I just don't like it when people don't exercise but they they say they did by counting their steps steps are not bad they they got that Circle check yeah I did work out at 5:40 in the morning yeah that that's that counts right I just I don't know I'm not a fitness expert obviously but walking is a pretty efficient movement that human beings are pretty good at doing like doing something hard I think counts as exercise but that is neither here nor there speaking of hard things Lindsay you've done a lot of hard things and you are very financially fit much like Rob's physical fitness and I'm excited exed to get into your story today a little background for everybody who's listening 476 units across 18 properties and you will be crossing the 500 Mark in just a few weeks congratulations on that fingers crossed that's right that's a big Landmark yeah yeah it didn't close yet so now some of these properties are Partnerships which is awesome that you disclose that because it's very common in the world of podcasting for people to claim that they have 7,000 units but they really are just a limited partner and other people Investments you you've got a mix of single family duplex fourplex 10plex all of the plexes cons including large multif family with 212 units you live in Pennsylvania where you also invest as well as Indiana Chicago and South Carolina Kansas City and Springfield Missouri we got a longdistance investor in the house here but not the West Coast yet has haven't made it over there so it's all East Coast M and you've been doing this for the last 5 years if 500 units in 5 years sounds unattainable I get it but we're going to be focusing on the early days of Lindsay's investing and break down how she paved the way to get from there to here so you can too and a fun fact Lindsay raises peacocks right I'm a crazy person that is that is for sure do you own them or do you raise them do you train them for other people wellit yeah they don't do any tricks for me but uh I grew up on a horse farm and full disclosure now I live in a neighborhood it's at the end of The Cue sack thank God we don't have any hoe feaser I 100% % would get kicked out but a couple years ago I missed having some of my uh fun little animal friends and one of the other Physicians that I work with said hey do you want to raise or try to hatch some peacock eggs I said yeah absolutely sounds fantastic so five years later uh here we are doing it every single summer so yeah my neighbors uh we're I'm sure they love hearing them and seeing them did you feel like kisi from Game of Thrones holding your peacock eggs yeah I didn't step out of any fire so I'm not that cool nothing like that no but did you have the moment where you felt like it like for Halloween maybe you dressed up that way you've got the blonde hair you held the eggs no but I don't have a Halloween costume yet for October so I think that's a good idea yeah you could like change your Instagram name to like like Breaker of Chains the Conqueror mother of peacocks like have that really long title passive peacocks I don't know something to real estate investing like before we get into your backstory tell us in one quick sentence what's working for you in real estate right now um conserv conservative underwriting is definitely uh key for us right now um times are a little bit different now than when we started uh 5 years ago it's a little bit easier and you had a more of a buffer than you do right now that is such a good point and this is something that doesn't get talked about a lot it is not how do I want to put this like when it comes to real estate investing it there's always going to be some art to the science so the last five years of multif family investing really any type of properties that were based on commercial lending there's a formula that we use and it's basically your noi and the cap rate combination of those two things create value well nobody saw interest rates tripling or right like that fast and that has a massive impact on the cap rate and even if you did everything right as an operator you increas you could have doubled your noi and you could still get stuck with these interest rates increasing and uh to be fair I don't know how much I blame some of these operators that did a great job and they still ran into problems because when they have to refinance their property that doesn't debt service anymore at today's rates or when they go to sell it to somebody else there's less people that want to buy it and those that are going to buy it they can't pay as much because of this cap rate problem so I say all that to say that conservative underwriting can be a win and many people that did not buy in the last five years that felt like oh man like I'm not taking action I I know all this stuff but I'm just nervous what if rates go up some of those people are looking pretty smart and the ones that did buy in The Last 5 Years are probably feeling really good if they paid more to get like a 10year fixed rate not the three threeyear balloons that some people took out so I appreciate you saying conservative underwriting is uh working for you right now because that doesn't get glamorized we are always like what did you acquire how many units did you get here's a picture of me signing my documents on Instagram everybody gets to see it right but you don't see a lot of people say here's a picture of me taking a haircut on this property because R Sky Skyrocket it on me yeah we're definitely not closing as much as we had been but the ones we are were very confident in their little cash cows so that's good now one of the things I hear a lot of other multif family operators commercial operators talking about is that the cash flow itself is incredibly hard to find they're focusing on value ad or rent growth are you finding something that you feel like is Cash flowing right out the gate year one so everything we're buying is there's a degree of cash flow to it um unless we're getting a few of these off Market ones where they're complete uh Renovations where you we can talk about some of the the ones that we've bought before where there's literally like grass growing in the front um living room and everything like that but we're really trying to get cash flow from day one with still having value ad that we can uh go in and then refinance and still pull out the majority um if not all of our money okay well that's good news for you Rob because you got that grass growing on the top of your head apparently it grows in more places than just front Lawns oh I give my whole family haircut so yeah I can come over I'll give you one too will you be at bpcon I'll wait to cut it no not so not only are you a barber but you are also a doctor and that wasn't the expectation that your parents had for you growing up what did they say when you told them that you wanted to become a doctor yeah for all intents of purposes I shouldn't be a doctor I definitely shouldn't be a doctor who is doing real estate investing and definitely not a doctor doing real estate investing with peacocks in my garage but um I grew up in a very small town I was the first person in my entire family to go to college um nobody invested um my parents absolutely thought I was going to lose all my money when I first said that I was going to go into real estate investing so my mom she was very happy that I went to college God bless her love her so much but when I said hey I think I want to go become a physician she's like that's a lot of work that's a lot of time that's a lot of money why don't you you know be a nurse your your cousin's an LPN she makes a a nice amount of n money so there was definitely some dissuasion from my own family members to become a physician I still have my one of my birthday cards from my dad he's a man a few words but when he speaks it you listen to him he speaks volumes and I have it up in my office actually and it he said don't listen to the negativity you can do anything you want and you'll be good at it so I still look at that quote um to this day so I figured you know I I have the grit I have the determination I I can become a physician so I went for it you didn't ask where was this when I was in Premed and you were telling me not to do it yeah yeah I had a similar experience my dad actually said you would you're not going to be a cop you'll never make it you're not you're not Tough Enough which is crazy uh I don't know where that often comes from I know that the people that are naysayers don't often mean to be as discouraging as they can be and it can be tricky cuz sometimes they're trying to protect people from delusion there are some people who say I'm going to be the next Gary vaynerchuck and someone needs to put him in their place and say no you're not you can't even hold a regular job but then in other cases there are people in our lives that mean well that can be discouraging so how did you know Lindsay what you should listen to from other people and what you should say nope I don't care what they say I'm going to move forward yeah good question question I thrive a little bit on um beating the odds and if somebody tells me no I take that as a challenge um whether that's you probably can't become a doctor well I'll prove you wrong that was that was a long 11 year old 11e challenge to get to that point but um similar to real estate when I first started the very first broker I spoke to said uh I don't have time for you and that was a big challenge to me to keep going forward and prove that I'm wrong too so I like a good challenge yeah so speaking about challenges uh what was your upbringing like did you have challenges when you were a child you had to overcome as well yeah we like I said neither I was the first person to go to college in my whole family um I it's not like we were poor but we certainly lived in more of a scarcity mindset instead of an abundance um nobody taught me about investing stocks or otherwise um my mom literally has $330,000 in her entire retirement fund right now so this is it's not like I grew up you know with a silver spoon or anything like that so um you know I mentioned I grew up on a horse farm I I there were no neighbors around me I really was uh a friend to all the animals and everything like that so I did a lot of reading uh I love to to learn obviously wouldn't to spend 11 year old uh 11 years becoming a physician so um yeah spent a lot of a lot of time reading and learning sure sure and so you mean you go on to become a doctor right this is a huge feat Congratulations by the way and tell us about what it was like working as a doctor in your early days yeah so it's it's a long road you know you go to uh college for four years medical school for four years and then depending on what specialty you want to go into it's another 3 to seven years of training and residency so yeah it's a lot it's a long time it's a not a small thing to to want to do so um in residency you're working 80 hours a week um it's an average of60 $65,000 for salary so when you break that down it's like $16 an hour as a physician and my specialty is em emergency medicine and Trauma um I'm surrounded by people who didn't think they were going to end up in the ER you never wake up thinking you're going to be in a car accident have a heart attack or a stroke or anything like that so I realized okay if I am not going to work and putting in these hours I'm not getting paid um and when I was in residency my husband and I had our first kid he's six and a half now um but we realized okay we need to do something where we are more financially secure and if God forbid I'm not here as something we're still having money come in um instead of just relying on my W2 which I have to physically be be there for so that's when we started to look into okay what are we going to do how are we going to make some money besides my W2 job sure I mean there's this obviously there's the perception that doctors seem to do well is $65,000 normal is there kind of a point where it's supposed to be more than that how does that work for doctors yeah when when you become an attending so once you're done that 3 to seven years of residency training then your salary does increase uh to varying degrees depending on what type of physician you are so there there is um a light at the end of the tunnel but most of us have t hundreds of thousands of dollars in medical school debt when we come out I had $230,000 in medical school loans that's not an asset that's a big liability so a lot of debt to pay down too sure sure okay so at what point was it where like how how when did you know something needed to change because obviously you get into this groove you're like all right I've got this W2 job all my time is being soaked up I need to change something what what was that turning point for you yeah my husband and I you know we started to look into what can we do to invest in all the Physicians that I worked uh around or very stock heavy so we started to look into the stock market it didn't excite us very much and then my husband uh listened to the book which Dad Poor Dad you know Gateway Book for a lot of us I'm sure and he said hey I think you need to listen to this and see what you think as soon as I read it I was like okay this is it we need to do real estate investing and it was like mindset shift and full force ahead okay and so like was that the spark for you that got you actually into real estate or when did Real Estate actually get come into the picture yeah so as soon as uh I read the book I I said okay we're going to do this and I signed us up for a 3-day real estate investing course um there was good and bad to that um it was almost a little bit like a Time shell or time um chair sell that they pump you up and then at the end there was this up sale so we were like okay we're going to join this group for $30,000 and we definitely that part wasn't worth it yeah so know wasn't maybe the the best start of it to it but it did teach us about real estate investing uh leverage and it got us um well first of all I learned about Bigger Pockets through that I didn't know what that was until five and a half years ago I remember standing in line for coffee and one of the other guys said hey do you have you heard a b Bigger Pockets I was like no what's that so um we uh learned about local real estate investing groups and I went to one of those with my husband the very next month and that's actually how we got our first deal so there were there was good that came out of the first course we took okay and so you is it sort of like you're Allin you want to go into like buying properties investing is it more the you want to be a realtor like what what exactly did you want to get started in when you were like all right I know I want to be in this career yeah so just like in medicon we have this saying you don't know what you don't know so I at first thought I was going to be a wholesaler I was like oh okay that sounds okay I can find these properties and then I can sell them to somebody else um not thinking okay well that's not really actually passive income that's not something you're going to hold and still get cash flow from every month so the first local Meetup that we went to um there was a a guy his his wife is a pH and I that resonated with me obviously and he at the time owned 20 units and he said he got 20 units in 5 years to me that sounded unattainable at that time I'm like wow 20 units in five years maybe I can be like him and the next meet up we went to he said hey we have I have um two uh single family properties and it was a d-class area which we didn't know what d-class was or anything at that time but he said I am sick of these two properties they too far away they're an hour from where we live but he said I'll give them to the highest bidder in this room basically so I ended end up saying okay I want these will be our first properties so we got them for sight unseen for $2,500 each so we got two properties for $5,000 I was like that's it I'm an investor like he came over to my house we had this paper contract we signed he's like okay just go to the courthouse this is going to be your deed he's the key he's here's the keys and he walked out so I remember we had a bottle of Corbell champagne my husband and I popped we're like yeah we're Real Estate Investors this is before we even went to see the properties so I'll sell this to the highest bidder in the room in the room in a local real estate meet up yep so mhm yep that is a ballsy move on their part yeah it created some fomo in the room 100% yeah and of course you're targeting people who don't know anything about investing so that's right you hear everyone else talk about the success stories of real estate investing you assume being an investor is a good thing you're not thinking about what you're actually buying can you describe what a d-class neighborhood is for the listeners yeah so d-class is where you don't want to buy it's the the crime areas um that was was not the property that ironically had grass growing in the um front living room but it did have squatters that we found when we finally opened up the doors so there tends to be some drugs high crime rate in those areas uh versus C-Class which we have some C-Class areas uh a little bit better more working class uh bclass as are try you want to find the uh B or C property in an a class neighborhood ideally so the a class are the very very good education ones uh you know the perfectly manicured front and everything like that um but maybe tend to be less value ad so this these were in very bad areas yeah so okay so you foreshadow a little bit here you buy these property you buy two properties for $2,500 each yep 5,000 total for two properties and then they appre they appreciated greatly and provided insane cash flow right oh yeah we walked in they were perfect we didn't have to do any rehab no not at all so yeah we walked in he um first of all we didn't ask because again you don't know what you don't know and he neglected to uh give us full disclosure that he was behind on a lot of taxes um there were squatters in one of the houses which he tried to remove so he cut all the pipes um and that did not dissuade them to stop living there so when we walked in there were urine bottles all over the house um the yeah it was it was a mess to say the least let me ask you a question looking back in hindsight how much would he have had to pay you to take these over to make it worth it yeah we it would have been a hard pass knowing what we know now yeah but I mean was there number like 100 Grand would have been worth it or 500 Grand so um 100 Grand yeah I would have taken them for 100 grand yeah and that's just a thing that never gets talked about right like you you bought a job basically yeah we oh yeah we bought a job we we learned a lot um we googled uh local contractors and we found a guy and we we paid him UPF front so that was a really wise thing to do with no contract so yeah lots of good things he still has a every mistake we all made in the very beginning hey you on the same deal so many so many mistakes okay so you you learned some lessons here you said you don't know what you don't know what what would you say some of the questions should have been like what what were some of the questions that you wish you could have go back and and ask to help avoid this yeah um what we I think we asked zero questions basically other than uh where are the properties so so really just any question so any questions to start but yeah I mean I definitely want to asked do do you currently have anyone in there what are the rents uh you know all the things that you should be underwriting for right um what what's the property taxes what are the what's the insurance you're paying for are you up to date on taxes so all the questions sure let me ask you this in that exact moment you know you buy these houses what did you think was going to happen were you like thinking oh I'm going to buy these houses I'm going to rent them out and I'm going to cash flow like or was it sort of like yeah let's buy it and yeah I know real estate is good let's just figure it out like what what was the actual mindset there to our mindset was knowing that this was going to be some learning properties I mean $55,000 isn't nothing but it's not huge it wasn't going to break our bank account at that time so we took them as some learning opportunities we learned more than we thought we were going to have to but um we did buy them we did end up getting them fixed um we did a lot of the work ourselves I joke that my husband's from France he moved to the US 13 years ago and I joke that when he moved here he was the fancy French guy who couldn't even change a bulb and now the poor guy knows how to rehab everything he he changed an entire sewer line on one of these properties um so we ended up rehabbing them we did the bur method here if anybody's heard of that David green and we pulled out over over yeah over 100% of our money on the property so we owned those for 5 years actually we just sold them 6 months ago and we so we had bought them for $2,500 each the one unit we put put uh $155,000 into and the other unit we put $20,000 into because they they were an absolute mess um but we we ended up selling them for 60 and $770,000 each in the spring as well as parts of your soul parts of yeah but we can never get some of that back I had a nail go go through my knee when I was taking the carpet off of the stairs on the one property trying to learn how to when you sold that property certainly there must have been some aspect of like wow I'm really letting go like my first set of bad memories shaped me who who shaped who I am today or were you like hell yeah get these things out of here yeah it was a combination of both because even though we had a really rough start once they were rehabed and we ended up getting some good tenants in there they they were cash flowing $400 to $500 uh per unit so and we had bought a duplex in the town um a month after we got the first so we were really rehabing four at the same time um but all of them were cash flowing very well despite being in a bad neighborhood yeah I always like to ask this just out of curiosity if you could go back to to younger Dr duay uh do you wish you could have avoided these houses or are you happy that you went through through that Journey because obviously you've you've G you've gone on to do like a pretty amazing thing with your portfolio yeah you know I joke about how bad they are but we did learn a lot and um I don't think we would have some of the the same grit and determination um if we hadn't gotten through all of those uh landmines and troubles that we had with those first properties and we can help guide other people as well I mean people are they know how bad they are they've seen the pictures on my social media and everything so they're like hey you know I saw your bad properties how did you get over this so we we did learn a lot and there we we can teach now on some of those what not to do okay so you buy these properties you sold them where there's a little bit of resolution there how did you scale up from there yeah so we we had those first four that we acquired we ended up doing the the full bur on those um then I started doing some Direct Mail campaigns so handwritten letters handwritten envelopes sending them out and we had some people reach back out from those we ended up getting a couple single families in more B+ a minus neighborhoods at um a lake really close to us um we still have all those properties we got a 4 unit from um one of the off-market campaigns from a seller in New York and uh we you think we would have learned this listen but we also bought this one site on scene and this was H the grass and the living room that we ended up walking into we got it for $220,000 very big building it's um they they're uh just over 1100 square um feet per unit so those were full rehabs we ended up pulling out 126% um of our capital on that property too so another perfect infinite return Burr on that one um and then we ended up getting our 10 unit that was our seventh deal just between my husband and I so we were doing everything ourselves I was working extra shifts at the hospital Moonlighting to fund the properties buying them cash or traditional 75% um LTV from from local banks that we were using and starting to form these good relationships with but then each property we were buying we were running out of capital so instead of paying an actual contractor to do it quickly my husband was learning along the way and doing a lot of these rehabs himself so he was also managing the tenants and the properties and everything so this none of this was passive the the way we thought it was going to be when we first got got involved so we really reached a cap where we're like okay this is another job we're not scal the way we want to and our resources are getting tapped out here when we got to 22 units passive income is one of the greatest marketing statements in ever in the world just that anything would be passive how how people have been able to fool others in thinking that you'll buy real estate and never touch it again when nothing else in life works that way like have you ever met a married couple who's like I worked really hard to get my wife and then I married her and I never had to do anything again she just loves me every day and it's passive love at this point like it's kind of like my husband would definitely disagree with that statement from yeah and fit there's no passive Fitness it's just funny how we've done that now Lindsay you've clearly read the Burr you understand that strategy I'm curious if you guys ever read longdistance real estate investing yeah I yeah that was an audio book at the beginning we listened to I'm again I'm a good learner the first year that we started investing I literally listened and read over a hundred different books not just real estate but mindset and everything so yeah so with the principles in that book was that something was skipped when you guys bought a house without seeing grass was in there or had you not read it yet we probably got through that the half year we were already um a good eight units in in deep and uh in the rehab process at this point but it just it sounded like a a pun attend in a long-distant con concept to us too at the beginning we did want properties that we could feel and see and Drive by at the beginning but that that got old after we got to 22 units and that's when we started looking for Partnerships and other people but you just didn't get a video made that showed what the condition of the property was right cuz there is a way to invest a sight unseen I I do it all the time but somebody has to see it doesn't have to be us right so that's another Learning lesson we have JV deals where we have not set foot in the properties but we we own them we're Partners we're very active in the JB deals but yeah we haven't physically set foot in them me too I have lots of properties I've never been in never seen before but someone did right Somebody went through took a video there was still due diligence that was done whether that's a boots on the ground partner or yeah real or something yeah exactly so that's a learning experience you learn from that as well and speaking of learning I understand that there's a method that you learned in your medical residency that has helped you improve how quickly you learn can you tell us about that the the C1 do one teach one that's the one you're talking about yeah yeah so in medicine you we we have that saying so say you're going to learn how to do an intubation you watch somebody do it then you do one yourself and hey now you're an expert after one so now you can teach one so I mean we we definitely do that in medicine but it's applicable to real estate investing too and it's all about learning processes and perfecting them to get to get a method going so I mean just like the single family uh burs that we did we initially read about it you know watched some podcast listen to podcast about it talk to some of the other investors you know we did one ourselves a couple of them um and now we are mentoring people and teaching them about it as well now now I'm a little nervous to get intubated knowing that the doctor may have only done it one time not with every procedure but yeah so youve you've said that your seventh deal is a really like a big turning point for your career can you tell us about that deal yeah this oh my God I love this deal it's we still own this property so this yeah this had been a direct mail campaign um what does that what does that mean for oh yeah so yeah so we use a software it's called re property finder um you can search for any number of units any amount of equity in the property and at that time we were targeting like the mom and pop type owners so these were people that my criteria at that time had been owned for 20 years they had 100% Equity so they had no loan with the bank um and we were hoping that these people weren't running it quite like a business like they should and these are the properties that we ended up buying so um we bought this one there it was 10 units eight of them were rented at the time but they were significantly under rented um the average rent in that area at the time was about $850 he was renting them out for 5525 he had owned it for 25 years it was wellmaintained but it was very very dated and then two of the units in the back on the bottom they were basically just being used as storage they were uninhabitable so we negotiated this down to $250,000 um and then the bank financed the whole construction loan for the two units in the back um M we learned a lot with this property too my husband learned in this one that cockroaches can fly and that ceiling TI tiles can hold a 13 pairs of dirty underwear too he it fell on his head when he was doing one of the the rehabs on the properties I don't know what that tenant had in mind but we ended up uh raising rehabbing the the units um we are now getting between 1,000 um per unit and $1,200 per unit so we overd doubled the rent um it appraised for just under $800,000 when we did our refinance last August on this property and we got 275% of our money out and after the refi we are still getting between 5 and 550 per unit cash flow so you sort of it's the these bur principles that you're employing you're just doing it in the commercial space not residential and I'll clarify what that is when you bur you the basically the fundamentals here are you trying to buy it below market value you're trying to add value to it once you've done that or combination of those two you're going to refinance now we typically describe this from a residential framework where the way that you add value to it is by increasing its comparison to a better comp you're looking for a residential property that is worth more and you're either changing the floor plan the square footage or the condition of the property to match a comp because that's how residential real estate is valued it's actually kind of silly how that works it's like well what the Joneses pay for their house all right I'll pay that doesn't make any objective sense commercial real estate makes a lot more sense from a financial perspective it's what does the property make how much can I expect to uh earn from this property if I buy it so what you're doing is you're buying properties below market value because they're being operated inefficiently the rents are too low the expenses are too high maybe there's some deferred maintenance and so the owners are like well let's not raise the rent on them because then I'd have to go fix something up and you're adding value to it by fixing those things you're improving your income and you're decreasing expenses which improves the noi now you've got a property that's worth more and hey sometimes you catch some uh Tailwinds sometimes interest rates go down cap rates go down you the property becomes worth more just like in the residential space values have been going up as we printed a bunch of money and so it made it easier to pull your money out of a bur the same thing has been happening in the commercial space it's just as simple as residential real estate you're just pulling on slightly different levers cuz commercial real estates value differently that's exactly right yeah we implemented what we did with the single families and the duplex and we took it to the commercial 10 unit and it worked wonderfully well that's that's amazing I want to go back a little bit because you said you got 275% of your money back what the heck did that feel like that's insane I remember the day that we got our refi check and I was sitting in my husband's truck with which the business pays for it's another great thing about real estate investing business expense and I remember sitting there in his truck and crying because the refinance check was $31,000 and refinance checks are not taxed and I was literally just crying in the truck thinking oh my goodness this is more money than I made seeing thousands of patients in the last year at my W2 physician job and it was we were already you know very much into the real estate game but this that was when I truly realized we can do this as a career and this can completely replace uh my salary in what we're doing that that's that's so crazy wow I want one of those give me one of those so that deal was also a turning point in another way as I understand it tell us about getting stuck and how you were able to get unstuck yeah so like I said this was our seventh deal just be my husband and I and that took us to 22 units but it was a full-time job I mean I was still doing more than full-time at the hospital with the Moonlighting shifts to finance these deals my husband was doing rehabs he was was doing the property management he was doing the tenant management everything and we realized we were scaling but not as fast in the way we wanted to and we sat down we're like okay what are we going to do do we want to keep doing it this way or what can we do different to to make this easier on ourselves and continue to grow our portfolio and not get burnt out so we decided okay we need to leverage more but in this time we need to leverage other people's money and other people's knowledge and time as well because my time was basically maxed out I can't make two of me as much as I wish I could so we decided we need to start looking at some Partnerships and working with other people that's amazing so tell us a little bit more about you said is it at this time you're sort of taking on more properties you're in scale mode but are you trying to figure out like what's the next step from here how how did you like where did you turn the corner exactly yeah so we started going back to some meetups um we started looking more into Partnerships and uh we joined a mastermind group and that was really a huge uh turning point and of Leverage for us as well um tons of masterminds out there obviously a lot of free ones a lot of ones Focus just on short-term rentals just on commercial property we joined it's called make it happen Mastermind um and we have weekly sometimes monthly group calls um a lot of accountability and we've formed Partnerships with other people in this group um and that's how we started to scale up into JB deals um which obviously we're still very active in as well as being GPS on some syndication deals so that's interesting because it you know you mentioned at the beginning of this you bought a course or you got enrolled in a course it was really expensive wasn't particularly a winner for you now you're you end up going and you joining a mastermind was there like a difference uh as to why one was so much more pivotal for you the second time around was it the people the connections yeah we had looked into a couple and this one this one just felt right like the vibe of the people we were kind of interviewing different groups to see which one we were going to Vibe with this one particular was um focused on the people in the group um do they have good ethics as well as doing deals together and that's what we wanted to do we didn't want to focus just on the education component we wanted to to scale with some more properties yeah you wanted to do yes we wanted to do not just learn which obviously we're still learning all the time but yeah so I'm pretty curious here because I've got to imagine especially early on in your in your career as a doctor that you're taking a ton of calls uh you know you're you're on call as a doctor you're intubating people for the first time possibly second time at the same time you're also managing your real estate portfolio was there ever a moment where you're like just taking insane insane amount of like tenant calls during your actual job like during the work day yeah it's really hard to do CPR and take like a toilet call at the same time from a tenant so yeah I mean luckily my husband dealt with a lot of that he kind of has the the the pager I could I should say for the tenants and I have the pager for the patients but yeah I mean it's tough to manage because at at that time when we reached our 22 unit ceiling we also had two very small kids at home they were two a baby and a toddler so you know I had the mom aspect and the family aspect going on as well so it was it was a lot to balance so they're they're tiny yeah did you say they were three and what was the other one I think she I think she was a year and a half old at that time time is flying now cuz right now they're six and a half my daughter just turned five last Thursday and our son is 22 months old our Second Son listen hey like I got a two and a three-year-old right now first of all it's a hard age Gap but second of all to be in the throws of your of your real estate career is absolutely crazy were they coming to job sites with you were they your makeshift handy handy people or how how was it like juggling all that yeah our our six and a halfy old now he he actually really likes it he he says my hous is when we we'll go past some of the local ones and he picked up a quarter a couple months ago he said you need money to make money so he he's definitely listening to some of the things that we're saying about investing so you hit a point where you recognize okay we need some support we cannot keep going at the pace we're going we have kids we have jobs these properties that we bought you've done really well now on the other end of that is that's because you put a lot of effort into these you pulled 275% of your Equity out because you were hyperfocused on turning these things around it is not passive it's passer right it's less passive than having to be a doctor but it's still not completely passive once you recognize partnership was the road you were going to take what are the questions you came up with that you recommend people ask a potential partner to vet them out yeah so um one question that I always ask other people especially as we're doing some of these uh bigger syndication deals is what other full cycle deals have you done um it's one thing to say I closed x amount of properties but if you closed a whole bunch of them in the last year but you're running them poorly it doesn't matter you anybody can take a great deal and run it into the ground if you're not managing it properly so I like to see what the other partners have done full cycle and full cycle well to make sure they can be good operators so that's a that's number one big question that I'm looking uh for in other partners and why is it important to see full cycle so just like in medicine if you get into med school yeah it's a great feat to say okay I'm in med school to become a doctor but that doesn't mean you are a doctor yet you still have four more years in med school and residency there's a lot of opportunities to fail until you actually can you know be a practicing physician on your own it's the same as real estate just because you buy the property doesn't mean that it's going to be successful so full cycle means you've bought it you Managed IT well and you've refi it out well or you've sold it successfully and not in a Cell as in a foreclosure that mean you didn't operate it well if that happened and that's just because you don't want your partner getting stuck on something that they don't have experience with correct yeah yeah and some of the teams that reached out to me to see if I wanted to join they were all brand new teams they didn't have any experience and syndication is a little bit of a dirty word right now too because there are a lot of people with Bridge debt that are getting into some financial trouble right now and of course those are the big ones that you're seeing about on the news and everybody thinks multif family is bad now good point okay what's the next thing that you'd ask someone to vet them out um I like to see um are are they vertically integrated in their own company um and that's not something that's a deal breaker for me but especially um some of the bigger deals that we're doing if they have and successfully have their own property management company that can save a lot of expenses um one of our properties in South Carolina it's 110 unit we vertically integrated this summer and and the operating expenses have gone down significantly which means our noi has gone up a lot too and can you just briefly explain yeah what is vertically integrated mean yeah so having your our own property management company um in the building and not using a third property uh property management company and doing that across uh a couple of the properties that we own okay Carry On so uh that's something that I I like to see but it's definitely not uh necessary okay and uh what's the next question you'd ask yeah so another one um asking for their details of underwriting underwriting is to me one of the most probably the most important thing that you need to have uh in a successful real estate deal anybody can make numbers look good on paper but that doesn't mean they're accurate I cannot tell you how many times other people have come and presented a deal to me saying hey do you want to do a JB do you want to partner do you want to put some of your money into this it's a great deal the equity multiplier you know you're going to double your money in five years so I always say okay show me the underwriting and my husband he's a mechanical engineer by background so he's very very nitty-gritty on the underwriting and he'll start going through it and he'll look up and see okay your taxes are not written down correctly he talks to our insurance broker and they've underestimated what the insurance is going to be by 10 $20,000 at some cases on some of the properties um there are many many things that can go wrong that if you're not doing your own due diligence and looking at how they're underwriting the deal can go very poorly sometimes they're not putting in Property Management fees if they're using a third company they're missing huge things that are really going to affect your property in a negative way and you're not going to be making money on it if you're not underwriting well so that that is huge and uh one of the other um things that I like to see is how how are they re researching the area of the property um we mentioned that some of these properties we haven't even walked into yet that we're doing Partnerships with so are they really doing their market research they they might give us uh the operating memorandum or a piece of paper saying okay you know subjectively they think that this is a great area because oh our friends our family's moving in they're building a new gas station here it's it's a really growing area but that's just them thinking that but then when you actually look into the numbers and the demographics it's losing 2% year-over-year for the last five years of population growth so I don't want to be investing in an area that is not increasing so I so mainly you need to be doing your due diligence whether you are an active operator whether you're a limited partner um you know limited partners that's the most passive you can get but you still need to be able to look at numbers and understand if the deal is good or not great questions there I really like that and that's something practical that we can all move forward with really quickly Lindsay give us a snapshot of where your portfolio stands today in terms of the number of properties the equity in the properties and your cash flow right now we have a total of 472 units um actually next Tuesday we're closing a 72 unit in Springfield Missouri so that one is going to take us over the 500 unit line which is going to be uh a huge Landmark for us so this is a mix of like yeah it's it's a big Landmark for us so that's over you know some of these single family lak houses we have a um 8un JV deal in Indianapolis we have a 21 unit in Chicago which is a short-term rental uh hostile Hotel type um and uh bar restaurant we have the 110 unit in South Carolina uh 212 unit in Kansas City um the 72 unit that we're going to close uh we have the 10 units and four plexes around this area and then uh across from the medical school at my hospital we're actually under contract to close in October a 19 unit a medical student so obviously that's up my alley and then two houses down there's a it's a big mansion that we're converting into a 13 unit also medical student uh building so we have some other properties in the works here too wow well let me let me ask you this is there anyone else in your life that you've proven wrong in reaching this point because I mean 5 00 units is a lot um but I'm curious are there are there PE people or like naysayers that that may have doubted you at the beginning that now might say like wow yeah that that is that's a crazy fee probably the first broker that I spoke to after that three-day seminar um they're like okay you need to find your core team you need to get a lawyer on your team you need to get a broker so I was like going down the checklist you know doing my good due diligence and my action steps and I called a local broker and he's like okay well what type of properties are you looking at uh what are your criteria and I didn't really have criteria so in in honesty to him I probably did sound like I didn't know what I'm doing because I didn't but he said he straight up said to me I don't have time for you and that one really got to me because I was like wow if I can't even get any Brokers to give me time how are how am going to close any properties so yeah I'm sure he would be shocked to to see where I'm at now um and uh to close just curiosity can you also give us a snapshot of what your life looks like today I'm sure it's very different than when you started I'd love to here yeah the life is definitely uh very busy probably if not even busier because now we have three kids instead of uh just the one one we started but um so I'm still working at the hospital as a physician I actually was there this morning and I've actually become the regional director of my uh hospital system as well so now I'm I'm managing a whole bunch of other doctors and everything too but um I had on my vision board earlier this year that I didn't want to do any more night shifts and I wanted to cut down um at the hospital and specifically for the night shifts I wasn't quite how that was going to happen and since I took this role that has happened so that's great I'm a big believer in manifestation and vision boards and everything like that so that that's very good I'm having more time at home with the family now um some more weekends off so and More Time For Real Estate and more time to do things like this um I'm holding some local meetups now so we usually get between 50 and 75 people we're doing them quarterly so that's these are free we're giving back to the community I love to talk about real estate investing so it's very fun for me to to talk and help teach other people this as well and then spending a lot of time with the three kids obviously they have have a lot of new hobbies as they're getting older uh my husband coaches our son soccer team so that that's fun for him and real estate's definitely helping us to give more time on paper now as of this summer we are officially financially free with our real estate investing so it's a good feeling to be able to work at the hospital because I want to and not because I have to I've worked very hard to become a physician I never want to give it up completely but it it is weight lifted off the shoulders to feel that what does financially free mean for you guys meaning we're having um enough cash flow from our investments uh that we I if I would lose my job today we are okay paying the bills amazing well congratulations thank you so now we're working on a generational wealth which is another goal Next Step you're five years in and you've created something that 99% of our listeners want I'm sure in the next 5 years you'll Crush that one out too thank you so much for for sharing with us if people want to learn more about you and connect with you and do all that good stuff where can people find you yeah so uh I'm the only lindsy duay on Facebook so you can type me in there um I have Instagram uh clovery capital.com is our website so um I'm very responsive uh to everybody messaging me so and again I love to talk about real estate investing so love to talk to anybody else too cool and David what about you David green24 on all social media go give me a follow there and check out David green24 and Spartan leag you can learn a lot about me how about you rob cool you can find me over on uh YouTube at robuilt if you want if you want long form video and then if you want uh really wacky real estate reels where David makes appearances on on my lists uh you can go follow me on Instagram too go check that out that was a very funny video that made if you want to know what Rob looks like in lipstick it's a c Miss Lindsay thanks for being here and thanks for sharing the story and thanks for not listening to the people that told you that you can't do it keep going thank you guys this is David Green for Rob putting the man in manifestation AB a solo signing [Music] off

Channel: BiggerPockets

Views: 35,826

Keywords: financial freedom, rental units, financial independence, real estate investing, real estate portfolio, how to build a real estate portfolio, passive income, rental property, income property, multifamily, multifamily investing, multifamily real estate, multifamily real estate investing, real estate investing for beginners, cash flow, investment, rental properties for beginners, brrrr, buy rehab rent refinance repeat, real estate, invest, biggerpockets, biggerpockets podcast

Id: d-OG67kzYwo

Length: 48min 20sec (2900 seconds)

Published: Thu Oct 26 2023