Summary: The goal of our Investor Spotlight series is to provide you with stories of real physicians and professionals who are at different points in their journey to financial freedom through real estate investing. At Semi-Retired MD, we love to share many perspectives and learn from others’ experiences along the way. Today’s spotlight is on an accountant in Seattle who wished to remain anonymous.
Semi-Retired MD was founded with physicians in mind, but financial freedom is for everyone.
Our resources and courses, like Zero to Freedom, are open to people of all professions — including today’s spotlight guest, an accountant who recently moved to Seattle with her husband.
They own three single-family homes, a fourplex and a duplex, for a total of nine doors in Indianapolis. In just two years, their portfolio has appreciated by more than 10%. We appreciate her insight and the time for this interview.
How did you become interested in real estate investing? What is your “why” behind seeking financial freedom?
I have a pretty long family history of people who’ve invested in real estate, so I always had that bug. On top of that, I was burned out at my job as an auditor at a Big Four firm and wanted passive income to be able to walk away from it.
I wanted to be able to take things into my own hands — to have the ability to walk away if I ever felt like that again. Financial freedom isn’t easy!
How did you get started? What was your first purchase?
My mom, a physician, introduced me to Kenji and Leti in August 2018.
As we were getting started, I was writing down all of these properties that my agent was sending me, and they all were so different — how was I going to choose? I asked my agent to send me five that he thought would be a good first investment and to tell me why. That really helped me understand his thought process for refining deal flow. It also helped me narrow the list from 100 properties to five. I ended up choosing the first one on the list.
After that, the process of purchasing our first property happened really fast. My husband and I got married in August, went on our honeymoon, and were signing documents on our honeymoon. We closed in October 2018, right after we got back.
Our first property was a single-family home. One month later, we put an offer in on our second property, which is almost identical to and a mile away from our first.
What type of properties are you focused on as you grow your portfolio with an eye on financial freedom?
Kenji and Leti introduced me to a friend who invested in Indianapolis. As an out-of-state investor, I wanted to make sure I had a well-vetted team. (Learn more about team investing for out of state rentals here)
I now have an investor agent in Indianapolis who works in the same brokerage as my property manager. All of our properties are in the Indianapolis market.
The rent-to-value ratios in Indianapolis were great. On top of that, it was very reasonably in my price range. Houses met the 1% rule easily. It’s a really stable market, and it has grown tremendously as investors have poured in. It’s also very landlord-friendly — basically, I know my taxes won’t ever be above a certain amount.
How are you balancing your real estate investing with your career?
It hasn’t been hard juggling the two because I really do enjoy real estate investing. A lot of people don’t necessarily see it as a hobby; they see it as a full-time job. But for me, I love running the numbers, I love looking at properties, I love talking to my agent and to other investors. I’ll spend hours on the phone with other investors. The goal of financial freedom drives me too.
2019 was a big acquisition year for us — we closed on four properties with eight doors. In 2020, I was going up for a promotion, so I wanted to focus on my career. We haven’t bought property in 2020.
How has real estate investing affected your lives? The good? The bad?
Obviously the financial side of it is great. But beyond that, I’ve been able to meet so many great people, whether that’s other investors, or my team out in Indiana, or Kenji, Leti, and all the people they’ve introduced me to.
I love real estate, but above all else, I’m so appreciative of the network of people it’s provided me.
Any big wins? Any points you’ve taken from those experiences that you can share with us?
The last property we purchased is one of my favorites. It’s in an A-class neighborhood, which we don’t normally purchase in, but we got a really great deal. Because it’s in a really good school district, the tenants who were in place when we bought it had signed a three-year lease. And it’s a duplex, so we fully gutted the other unit.
The first unit was paying most of the PITI (Principal, Interest, Taxes, and Insurance), so we did a beautiful rehab. I got to design the home and my team executed on it. The old owners had put new flooring down over the original hardwood, so we were able to rip that up and rebuff the original hardwood. We increased rents by about $400.
I think it gave me the flipping bug. I was like, “Oh, I really love this.”
Can you tell us about any difficulties or failures you’ve had in investing? What has been your biggest challenge? What did you learn from it?
When I was starting out, I was very much like, “We’re just going to do buy and hold. I want single-families.” That’s not a bad thing — they’re great properties; they’ve appreciated a ton and have done really well — but I had tunnel vision when it came to our strategy.
Then we ran out of capital. Suddenly I needed to think creatively. If we kept going down that route, we’d have to save up another 20% down payment to buy the next property. So I took out a HELOC and purchased other properties that way.
The first few properties might be easy to buy, but if you want to scale and grow, you have to get creative with financing. That’s something I still struggle with.
Where are you now in your journey? Do you still want to grow? What are your goals of where you want to be in 1 year, 5 years or 10 years from now?
We’ve decided to figure out what it is we realistically need to live a happy life, and then shoot for that. Our target is to get to $10,000 per month in passive income. Whether that be through fully paid-off houses or through increasing the amount of doors, I’m not sure — I don’t have a crystal-clear vision on how we get there, but that’s our end goal. Financial freedom is different for different people!
Any final words of advice for doctors and other professionals interested in starting out in real estate and eventually achieving financial freedom?
Your first property, or even your first five properties, aren’t going to make you rich. You’re probably not going to hit a home run on your first few deals. It’s important to get a good deal as your first one, but it doesn’t have to be a great deal or your best deal. The amount that you learn along the way is the benefit.
Have you found a way to creatively fund your real estate portfolio and achieve financial freedom? Join the conversation! Follow our General Semi-Retired MD Facebook page and then join our Physicians (for MDs or DOs only) or Professionals group! Also, if you missed it, check out our prior Investor Spotlight.
