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Investor Spotlight: Mike and Renee: Discovering the True Freedom in Becoming Financially Free

Investor Spotlight Mike and Renee De Lota

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 investor couple Mike and Renee who live in Austin, Texas with their three small children. Mike is a Family Medicine doctor who has been practicing for six years, and Renee is a fundraiser for Dell Medical School. Both work full-time and are busy parents who have prioritized becoming financially free through their real estate investment journey.

Motivated to find an additional source of income after suffering COVID burnout and stress during the Summer of 2020, they took Zero to Freedom. Today they have two long-term rentals, as well as a short-term rental in the hot Austin market! They acquired their short-term rental after 6 months of persistence and negotiation. They nicknamed their short-term rental “Giving Tree,” after the popular children’s book, and since the property just keeps on giving. The couple hope it will continue to give to their family for years to come as their children grow!

[Disclaimer: We are not accountants, lawyers or financial advisors, so please consult your own team of professionals about the topics covered in this article.]

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We interviewed Mike and Renee during our Fast FIRE to Freedom Summit in August. You can watch the interview here to hear Mike and Renee’s real estate journey in their own words!

How did you become interested in achieving financial freedom through real estate investing in the first place? 

Mike: Our first property was our first home—our starter home when I finished residency and Renee and I had just moved back to Austin. We became accidental landlords and accidental investors because we needed to upgrade our home. We moved into another house, not more than a half a mile away. Renee said, “Well, why don’t we keep this house in case we want to leave it to one of our kids or maybe we want to retire here?” 

A physician colleague recommended a property manager to us. He charged 8%, which at the time I thought it was fine. Now looking at the numbers, we were probably breaking even if not paying a hundred to $200 out of our pocket each year, just in terms of maintenance costs and paying the property manager. But at that time we thought we were winning. So that’s kind of how we got our first start. 

What is your “why” behind this? Was there a triggering event that led you to start your journey of achieving financial freedom through real estate investing?

Mike: During the pandemic, the physicians in my group all decided to take a pay cut in order not to have to furlough or fire any of our employees. But, then we had to take on a bigger load and see more patients. Renee was seeing what COVID was doing to me: I was suffering from burnout. I would come home just grumpy and irritable. I really, really felt like I was tethered to my W2 job, and the ebbs and flows of it. When things were going bad, right in the throws of COVID, I was not enjoying my work and suffering from emotional burnout.

One day I told Renee, “Look, I’ve never had to work harder in my life to get paid less.”

She really keyed in on that and started reading books on how to become financially free. She found Rich Dad Poor Dad. Then she found the Semi-Retired MD blog. 

Renee: It was really an extension of me listening to podcasts, which is what I typically do when I’m working out to just release some tension and Rich Doc Poor Doc came up. It just spoke to me at the right time. 

Once you decided to pursue financial freedom through real estate investing, how did you get started? 

Renee: Mike and I decided to take a leap of faith during Summer 2020. Out of the two of us, I am not risk adverse. I’ll try anything and see what happens. Mike keeps me grounded. That’s exactly what we need for our real estate investing—this balance that we have going on. We started learning more. Mike surpassed me, and I have a business degree and Mike has a medical degree. He really just tore through all this information on how to better understand cash on cash, and how to stay really consistent and conservative in our numbers so that we don’t get ahead of ourselves.

Mike: That came from me feeling uncomfortable about anything in business. In medical school and in residency, we just don’t get that exposure to personal finance, business finance, or how to run a business. I’m an investor. And so I just was consuming lots of Semi-Retired MD content and other real estate podcasters and blogs. And I’m the kind of person that needs to really educate myself if I’m going to put a hundred percent into it.

Renee kept telling me to read Rich Dad Poor Dad. I finally picked it up, read it. My natural reaction was, “Why didn’t you tell me to read this sooner?” 

What type of properties make up your real estate investing portfolio? Were they in state/out of state? 

Mike: We live in Austin, and we’ve purchased one duplex in Southwest Austin. And within a week of closing on that property, we also purchased a single family home in Southwest Austin. So our current and long-term rentals are all within a mile and a half to two miles of where we live. It just happened to work out that way.

We found one short-term rental in Hill County in Austin, where it’s beautiful to visit. I think it’s the second most visited location for wines in the United States. We fell in love with one property that blew our minds. 

We ran our numbers and saw the potential for return that would kind of put us halfway towards one of our goals. The first hurdle of many hurdles with our short-term rental was financing. The process was definitely a giant lesson in mindset and staying persistent because we had such a hard time trying to find capital. We explored hard money lenders, different commercial lenders. We looked at leveraging partnerships. Finally, we were able to leverage some of our savings that we felt comfortable tapping into without over-leveraging ourselves. And then we finally found a lender that would be willing to lend on a short-term rental property.

How are you balancing gaining financial freedom through your real estate investing with your career(s) and your clinical work?

Mike: Renee and I definitely wanted to go for real estate professional tax status (REPS) because that’s definitely one of the strategies that would set us on that Fast FIRE route to becoming financially free. But we were kind of hesitant for one of us to take a step down from our jobs since they’re both well-paying jobs. Click here to download our free Quick Guide to Real Estate Professional Status!

Download the Quick Guide to Real Estate Professional Status

So we looked into short term rentals, which is a nice kind of offshoot. You can take advantage of the tax breaks with short term rentals.

Can you tell us about any difficulties or failures you’ve had in real estate investing? Any big learning points you’ve taken from these experiences that you can share with us?

Mike: I was feeling discouraged. I think that this was happening around January or February. And we all know what’s been happening in the market. It’s just crazy appreciation, things are way overvalued. And it created a barrier to entry that we haven’t seen in awhile. When we first started in Summer of 2020, we were putting in offer after offer, after offer. And I think we put in 5, 6, 7, 8 offers being outbid and being beaten by cash offers from more experienced investors. And we were aiming to get a 10% cash on cash.

Every agent and connection in the real estate industry that we talked to was saying, “You guys are amateurs, good luck finding that.” The doubt started creeping up. We wondered if we were looking in the right place? Are we looking at the right kind of investment?

We just stuck with it. It’s all about investing with intention. After six months of perseverance we acquired our short-term rental property that we named “Giving Tree” after the children’s book since it just keeps on giving. We self-manage it, and specifically chose this property for the unique amenities that it can offer short-term renters. The cash on cash return for this property is about 35%, plus the tax savings to shelter active income since we’re doing the majority of the work on this short-term rental property and meeting the material participation requirements.

Renee and I are not working with as much capital as maybe some other investors were. So, we decided to be really intentional with our investments and make it more about quality versus quantity. We’re able to make sure that the deals that we have are great deals that can provide greater return. And so we’re able to see great returns on our investments without necessarily having to own hundreds of investments.

How about any big successes? Anything you learned from these good outcomes that you can share that might help other real estate investors?

Mike: When it comes to searching for properties, stick to your criteria and don’t get emotional about it. Once you know the neighborhoods, you really develop an expertise. And that happens once you’ve bought a couple of deals. You got it after one, because you were looking in the same neighborhood and all of a sudden, the second, third, fourth deal becomes easier because you can recognize hidden value. You can recognize what the rent should be and what the expenses are, everything. And, you’ve got the right team in place in the right area. The expertise comes easier to get the second and third deal. 

In real estate, there are home runs, then at other times, you’re going to really have to look for them and it’s not always going to be easy pickings.

Renee: We’ve actually had quite a few friends and family say, “We see what you guys are doing. We think it’s interesting. We’d like to get into this.” And I keep coming back to… if real estate was easy, everybody would be doing it. But Mike and I enjoy the challenges. Sometimes it’s a grind. We have a family, we have other jobs. However, we’re stretching our brains in a new way that will help us become financially free. 

Mike: Also, we are the kind of people where if you tell us we can’t do something, we’re like, “Okay, hold my beer.” So, it’s challenging but it’s very fulfilling. And if you do it with your partner, you learn a lot about each other and it’s brought us closer. You really learn how each other thinks, what their strengths and weaknesses are. We really enjoy it!

Where are you now in your real estate investing journey? What are your goals for where you want to be in 1 year, 5 years, or 10 years from now?

Mike: Our initial goal in the first year was that we wanted five doors. So we hit that. And then within five years we wanted to be able to replace my W2 income. And I feel like it depends on how one of our investments go, their short-term rental that could potentially put us halfway there.

I wanted to be able to go part-time or quit my W2 job in five years and rely on other sources of income. And that was a goal that we were working towards. But as we started acquiring properties that were cashflowing, that became less of a goal for me to achieve. Now, I’m at a point where I’m enjoying my W2 job, because I don’t feel like I’m tied to those earnings. We have income coming in from other places to help set us financially free. 

It’s made medicine more enjoyable. And that’s something that in a million years, I never thought that would be a result of investing and being financially free. I thought being financially free was all about, “I don’t have to work for the rest of my life.” However, it’s about having the freedom of not being tied to something as a means to live. And it really has reignited my passion in medicine in a way that I didn’t anticipate. It was an unintended consequence, a good one of investing in real estate. 

Have you found a way to creatively fund your real estate portfolio and achieve financial freedom? Join the conversation! Follow our Semi-Retired MD Facebook page and join our Physicians (for MDs or DOs only) or Professionals group! Also, if you missed it, check out our prior Investor Spotlight.

Semi-Retired M.D. and its owners, presenters, and employees are not in the business of providing personal, financial, tax, legal or investment advice and specifically disclaims any liability, loss or risk, which is incurred as a consequence, either directly or indirectly, by the use of any of the information contained in this blog. Semi-Retired M.D., its website, this blog and any online tools, if any, do NOT provide ANY legal, accounting, securities, investment, tax or other professional services advice and are not intended to be a substitute for meeting with professional advisors. If legal advice or other expert assistance is required, the services of competent, licensed and certified professionals should be sought. In addition, Semi-Retired M.D. does not endorse ANY specific investments, investment strategies, advisors, or financial service firms.

Do you want to learn how to creatively fund your real estate portfolio and achieve financial freedom? Join the conversation! Follow our Semi-Retired MD  Facebook page and join our Doctors or Professionals  group!

Semi-Retired M.D. and its owners, presenters, and employees are not in the business of providing personal, financial, tax, legal or investment advice and specifically disclaims any liability, loss or risk, which is incurred as a consequence, either directly or indirectly, by the use of any of the information contained in this blog. Semi-Retired M.D., its website, this blog and any online tools, if any, do NOT provide ANY legal, accounting, securities, investment, tax or other professional services advice and are not intended to be a substitute for meeting with professional advisors. If legal advice or other expert assistance is required, the services of competent, licensed and certified professionals should be sought. In addition, Semi-Retired M.D. does not endorse ANY specific investments, investment strategies, advisors, or financial service firms.

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Hi, we’re Kenji and Leti

we provide coaching and mentorship for doctors and high-income earners

Several years ago, we were newlyweds working as full-time hospitalists. On paper, it looked like we had everything: the prestigious careers, the happy marriage, the luxurious rental home, the cars, etc.

But in reality? Despite having worked for several years, we had very little savings. Despite our high income, we had very little freedom in terms of time or money.

One thing was clear: we had to do something.

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