Summary: This is the first of a series of posts highlighting the real estate journeys of members of our investor community. Our hope is that you’ll be able to relate to these stories, and that they will inspire you to aim big and take your first steps toward achieving financial freedom.
The goal of our Investor Spotlight series is to provide you with stories of real people on their journey towards financial freedom through real estate investing.
In this series we will interview a range of investors, from those who are just starting out to those who already own large portfolios.
Through this process, our hope is that you will gain applicable insights and inspiration for your own journey towards financial freedom.
Note that some of these stories will use real names while some investors have chosen to be anonymous. Some investors are also willing to be contacted by readers who are inspired by their story who are looking for a mentor or thought partner. If you would like to reach out to a particular investor, please feel free to write to leti@semiretiredmd.com or kenji@semiretiredmd.com, and we will pass your information along.
Investor profile
Abby is physician and single mom to a one-year old girl. She has been investing since 2017 as well as working at 0.75 FTE as a hospitalist. She currently owns three duplexes and two single family homes, a total of eight units. Her properties are located in Spokane, WA and Oklahoma City, OK.
How did you get interested in real estate investing?
I was actually inspired by Leti and Kenji. When I heard about the cashflow they were making from their rental properties and saw how it helped them cut back in their clinical practice, I thought to myself, “I can do this!”
What is your why?
I’ve only been practicing as a physician for a little over 6 years, but I feel like I’m killing myself at work. I don’t think I can do this for 20 to 30 more years. I would really love to be able to cut back as soon as I’m able to replace some of my income with cashflow from my rental properties. Once I completely replace all or most of my clinical income, I want to pursue something more fulfilling where I feel like I am making a contribution to something bigger than myself and am inspired each day. This may be in an area of public health or even another field. I am currently doing a lot of soul searching to figure out what this is. I don’t feel like I am achieving this goal as a hospitalist, nor do I think our medical system will enable me to accomplish this goal.
What kind of resources did you initially rely upon to educate yourself?
I learned from Leti and Kenji originally and then supplemented with books and podcasts. Leti and Kenji started me with The Millionaire Real Estate Investor. I then read What Every Real Estate Investor Needs to Know About Cash Flow as well as a long list of other books and articles. I have also attended many local meet-ups and I’ve been learning a lot from my investor real estate agents.
What was the story behind your first purchase?
My first purchase was actually two side-by-side duplexes that I bought in 2017. I was originally only planning to buy one duplex, but my agent told me that I could get a discount if I bought the duplex next door as well. I eventually negotiated down the price to $125,000 for each duplex. The duplex next door had just sold for $150,000, so I knew that I was getting a great deal. I had to spend more than I originally anticipated to fix up each duplex and had some difficulties with property management which hurt the bottom line in the first two years of ownership, but the duplexes are finally cash flowing nicely and well over 10% cash-on-cash return. These properties have also appreciated quite a bit. The duplex that sold for $150,000 is now selling for $195,000 no even two years later!
How are you balancing your real estate investing with your clinical job?
It’s doable but very difficult. I don’t have anyone picking up the slack for me when I am at work. Having to pump at work has also decreased my efficiency. I often have to work a full 12 hour day then put my kiddo to bed, take care of issues that arise with the rentals, negotiate deals to acquire new properties, figure out the financials for my business…and then try to get some sleep so I am not dysfunctional the next morning when I need to go see patients. I sometimes feel overwhelmed but creating a task list for myself and chipping away at the list each day when I have free moments helps me accomplish what I need to get done. When I am not working, I make a point to hire a babysitter for a few hours every once in a while so I can take some time out for myself to regroup. I do not plan on being this busy once I have acquired enough rentals but it is what I have to do right now to get my real estate business going.
Do you have student loans? If so, what are your thoughts on investing while you still have student loans?
I had loans of about $250,000 when I got out of medical school in 2009. I made small payments during residency through an income based repayment plan and initially was going to do the loan forgiveness program but realized this is not a very good program. I would be paying a really high monthly payment for 10 years, then after 10 years of these high payments I would be taxed on the amount of loan forgiven. I wound up refinancing with what is now called Laurel Road and got a much lower interest rate.
From 2013 to 2019 I have managed to get the loan down to about $115,000 by making payments and occasionally paying down principle with moonlighting and bonus money. I technically have about 6 more years of payments. I stopped putting moonlighting and bonus money towards my loans in 2017 when I realized that buying cash flowing properties could offset the cost of paying my student loan and would keep on generating income long after my loan has been paid off. Once I get to a certain level of monthly cash flow, I will likely pay off the student loan once and for all!!
What has been your biggest lessons about real estate investing to date?
It’s hard to be successful with rentals unless you have good teams. By teams, I’m mostly talking about property managers and contractors. I’ve gotten so fed up with the quality of property management that I’ve decided to take matters into my own hands and am starting to self-manage some of my properties. While this is a lot more challenging in some respects, I know that my properties and tenants are being taken care of the way that I want. To boot, self managing with an online platform has helped me drop the property management fees to about 4% which is huge for the bottom line.
What is your 5-year goal?
In 5 years, I want to make enough cashflow to replace most, if not all of my income. I want to be working less than half time in clinical medicine, and I want to be able to pursue my other interests as well as travel more.
Any final words of advice for people who are interested in getting started in real estate?
You really have to know what you are getting into. As I mentioned before, you have to be consistent. You can’t just ignore problems and let them build up. But if you can be consistent, it’s really not bad, and it’s definitely better than the prospects of grinding it out in clinical medicine for the next 20 to 30 years!
