Firefighter Portfolio Review: What He Actually Owns

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1:00One of the things I thoroughly enjoyed doing is bringing new faces with new stories in a series that we're doing called Portfolio Reviews. This morning we've got Lucas with us. How you doing, Lucas? Doing well. Thanks for having me. Absolutely. So Lucas, why don't you introduce yourself to the audience, kind of who you are, what you do, how long you've been doing in real estate, and then we'll get into the Q&A. Yeah. My name is Lucas. I live in California. W-2 is a firefighter of the past 20, 24 years or so. Wow. I've been still plugging away at that, have a couple of years left. And I started investing in real estate in 2004 with the first rent by a room basically living in the house, the house hacking, not knowing what it was, the thing. And then, you know, prices started kind of escalating in California, and I knew I wanted to get into real estate at a deeper level. My father was in a little bit of real estate game.

2:01He was a teacher himself, and the worst landlord you have ever probably heard of, he'll have a vacancy for, he's got a vacancy for eight years right now, and I tried to, because he wants to do the rehab himself. So. Oh, yeah. Yeah, don't do that, folks. Don't do that. He could have paid somebody to do the rehab and, and yeah, I told you that since then, but he never, he never really scaled, but yeah, again, I was looking around in California. It didn't make sense to the time, you know, I was having a decent job, having friends at Costco driving their lifted trucks, living in their $500,000 house at that time. So, looked at, there was a Katrina hit, and then there was what called the GoZone properties, kind of like undergones. Yeah. Yeah, yeah. So that was my first actual investment out of state. So I basically got two of those, 0607, they wiped out my W2 taxes, and then we had the,

3:06you know, the GFC, and at that point, it made sense in California again. So I started shopping around, had a, went through a couple of agents found an awesome agent, and then it was either me working overtime or rehabbing, you know, learning as I go, managing, doing everything myself at that time. So I think I built up to maybe, maybe eight doors or so in California up in probably 2008, 2000, trying to think when I went out of state again. Maybe, I don't think I went out of state till maybe 2014. So probably, yeah, six, eight doors in California at that point, a new primary, same thing did a house in 2010, got a new primary, kept the old house and, you know, rented that out. Just so I'm clear, in 2010, was that another house hack? It was, yeah. Yeah. Fucking cool. I like it.

4:06I like this story so far. Yeah. Yeah. Ran it out probably most of the rooms, you know. Let's go. Yeah. Young and single at the time. Yeah. Okay. Let's see what was after that kind of thing. California started getting a little, there were still deals kind of coming in and everything was just off the MLS, word of mouth, friends of friends, knew I was in the business, so a few short sales came across my desk that way, that worked out. And, you know, bigger pockets, maybe was around that time, I don't know, but started looking out of state again. Okay. Numbers were getting hard to work. They would have worked fine looking back, you know, I wish I would have kept buying in California. A big fan, a big fan of Norris too, so that kind of gave me the confidence to do some other things. So then, yeah, some across, there was a guy at work that did some investment in Oklahoma city. I only got one door there, I should have probably done more, but I only got one door there, still have it.

5:07I think I picked cash for the property, I think it was $15,000. It's simple. I think it's either two bed, one bath, something like that, but yeah, $50,60K, and a rents for a thousand bucks, it still have it. Nice. And, yeah, I kept shopping around in a 2015 or so, I got and I stumbled across Grand Rapids. Okay. Did maybe one flip there for no real reason, really, other than, you know, made a little bit of cash, and I think I got six or seven doors there. Okay. Two duplexes, I think, let's see, I still have five there, so five there, okay. They make sense, a hundred-year-old property, you know, they were, they were paying the first couple of years, but kind of all the major mechanicals have been worked out. Nice. And they're a great entry point on those, some of those just hold cash, I think there's a mortgage on one of them, but, and then again, that market's kind of creeped up and

6:12felt like I had a decent of footprint there. And again, like I said, I followed Norris a lot, and I think 2018 came around, and that's when I started looking at my California properties that were in the not best part of Sacramento, and I was not all, but a handful of them, there's four or five that were in, you know, C, C, we'll say solid C, maybe even C minus neighborhoods, or D plus, we can say. Okay. And rents were doing great, but there was always a, you know, a heavy term, not always, but there would be a heavy term, a few evictions, I've been lucky to have not had too many evictions over my career. Nice. But it's just kind of looking at what I could sell those four and get into, you know, new builds in Florida. Yep. So I started 10, 30, some of those in a Florida, and I have a decent footprint in Florida, eight doors in Florida, a couple of new complexes, so kind of between 18 and 2023, it wasn't

7:14supposed, I had a new builds going on with a builder, a country-wide builder, and they just, they, yeah, over-promised under-delivered as far as the time frame, they pushed out, I mean, there was supposed to be finished in four months, and it took, you know, almost, I think it was almost pushing two years. Oh, my goodness. Okay. Yeah. So then I started kind of, I couldn't really make rents were climbing, but so were prices there in Florida, and I, you know, it was like, it was getting tight, it was trying to make the numbers work, and I also had some fill 10, 31s, and that's when I started dabbling in some, some syndications, okay, and those haven't worked out well. Syndications as the GP or the LP? LP, yeah. Thanks for that clarification. LP on the app. Yeah. Yeah. Yeah. Those, uh, those damn syndications in 2021, two, three, or, yeah, the awful vintage years for me.

8:16Yeah. Yeah. Yeah. So it kind of trusted other people, you know, I was thinking these people are way more sophisticated than I would be, you know, yeah, and some of them worked out, but most of them did not, you know, and then that kind of brought me back to your community probably, you know, two years ago, like I know, but I feel, I feel a little bit rusty and a little stuck, because I'm not sure where I would like to jump in when, when, the time's right, I want to, you know, I'm kind of shopping and getting them Florida, but it's hard to make some of those numbers work with, uh, with, uh, the price, yeah, with, yeah, okay, all right. So, um, you've got a lot here, where, what, what, uh, you have a set of questions you want to ask first? My set of questions is, I've never pulled equity off of anything, you know, when times were good, I was right to, I was like, rates are going to stay at this for a while. So it didn't, which was good, you know, it, it, it's helped me weather and storm, you

9:18know, um, the money that I lost in syndications water in the bridge, it's a, you know, it's a learning, learning experience, look at it like that, you know, yeah, keep that direct ownership, you know, or, yeah, let's, let's, let's poke that a little bit just for the audience, because again, um, lots of my community will sometimes be enticed by syndications, maybe there's a big name, maybe there's a guru out there, um, you know, but obviously something I preach is do the work, ownership, all of that. So guys, what I would tell you is trust yourself more than you do, these, uh, I don't know, these, uh, these syndicators, you know, they're not perfect, right? They, they, they, they were doing deals that frankly didn't work at the time they were done. We're just recognizing the pain now, just trust yourself more, uh, it's what I'd tell my audience. Yeah. Yeah. It's very true. I never had, uh, it never, I never think, I never thought I would have a complete loss of capital either, you know, never, you know, I, I studied, did my homework, but didn't

10:23truly understand the dead stack, didn't truly understand the bridge that they were using. Yeah. Um, and just to be, yeah, the equity completely wiped out. Um, and how long, how long did it take from the day you put your money in until you realized you lost it all? Was it like two years? Probably, probably about that. Yeah. Again, some of them went fine. They went full circle and some were still ongoing, you know, hanging on. And I think though, we'll, we'll see time will tell, you know, okay, developmental deals. There was some, some, uh, debt, uh, the, the famous ATM fund. Mm-hmm. Uh, yeah. So there, there was a few. Okay. Yeah. But yeah. And we're, we are launching a new cycle and yeah, just know the sponsor, understand, uh, the risk you're taking more than anything, right? Yeah. Absolutely. Absolutely. That's what I did not fully understand going in. Yeah. And are you still house hacking today, Lucas? No. No. I'm, uh, have two young daughters. Yeah. Yeah. Yeah. I love that you did is you house hacked twice.

11:25Mm-hmm. And it makes total sense when you're single. I get it. Uh, I think more people should do this. Policeman, fireman, people in the military. I mean, it's just, you got, you're, you're running in that circle. You got a bunch of buddies. You know, that will likely be good tenants for you. And it's just, it's just like the easy button. You want to lower your monthly expenses so you can save more money. And you can just start this flywheel. I don't, I think too many people, frankly, don't do it. And I don't get it. Absolutely. Yeah. Yeah. All right. Um, so what kind of questions you got for me? Again, what, uh, again, I, I, it's time to get the wheels going again. I know I need to do the homework, pick the market. And I, I guess I should have came better prepared with questions for the expert, you know, but. Again, I have a ton of equity sitting in these, which I'm comfortable with. I like the casual. Everything's off now. It's press free. You know, I'm. What, what is, so what is your life cost? You've got to, you got a wife. You got a couple of kids. It.

12:25I don't want. Exactly. Not much. Eight grand five grand. I'm just. Yeah. You're right around eight grand, you know? Okay. Yeah. What's the portfolio spin off today? The portfolio. I would say probably 14 to 15 after, you know, after, after I account for maintenance, they can see. Yeah. All right. So you're roughly two X already. So again, um, I want to say this to you and for the audience. Congratulations. Thank you. And obviously your profession, uh, I'm guessing you're working towards some pension number. Right. You said two more years. I'm more of a, I probably would be working towards that pension number. But I'm just going to go at the earliest age I can. You know, I'm going to, I'm basically 40, uh, just turned 46. Okay. I'll, I'll just plan to go right, right at 50 basically unless something changes. But I still, I still enjoy what I do and all that. But, um, And then what does that give you? I have no idea. Is it like, does that give you 4k for the rest of your life or how does that work?

13:25Um, give me a kind of depends if I promote before I retire. But that's another, that's another question. Like, do I want to add, take that additional stress responsibility? Because I still enjoy going on to work. If it wasn't for the real set, I probably would be chasing that. Right. Um, but that I would give me however many years I put in, it's, it's basically three percent a year. If I, if I wanted to work till 55, I could probably go with 90% of my salary. Okay. Since I'm going to go a little bit, basically the youngest I can, I'll be, I think, at 20s, 26, 27. So that would put me at, I don't know, 75% of my salary. Because that'll go on top of the 16. So that'll take you to 22, 23. Yeah. Probably. Right. Okay. So I'm probably probably closer to probably around 10. Okay. So then that'll take you to 25. Yeah. And again, your life costs eight. I guess the first thing to tell you is congratulations.

14:25You're on a glide path. If you do nothing else that maybe pay off some debt as you, you know, you don't have to buy anymore. I guess is what I'm telling you. Just in my head, right? Life costs eight. At 50, you'll have 24. That's three X. So congratulations. Um, you know, you don't have to do anymore. You can, but you don't have to. And that should be very comforting. It is very comforting. I'm actually off on an injury right now. And it's hopefully be back soon. Shoulder injury, but hopefully back soon. But yeah, very. And there were some issues with, uh, with being compensated for being injured at work. And of delay and, and pay five, like four months or so. And I mean, I'm sweating in it all because. Because yeah, what's going on? And we live a simple life. So. That's, so again, you know, you, you're. Frankly, you're already wealthy, right? You, you, you, anytime. It doesn't matter what your net worth is in my mind. If you have a lifestyle that costs X and you take in X times two or X times three,

15:28you're wealthy. If you live on two grand and taken six, you're wealthy. You, you, you know, you live on 50 grand and you take in one 50 year wealthy. It doesn't matter. So, um, there's so much. I want you to be encouraged because I'm sensing a little bit of, you know, maybe a little regret or a little bit of, hey, let's, let's get back after this. But again, you don't have to. And that's, that's awesome. Yeah. Yeah. Yeah. The only, I know there'll be some increasing life expenses with two young dot, and they're three and six right now with those getting. Yeah. So that, so that'll go a little more. Yeah. And there's plenty of savings. Uh, the wife's got a good job too. She's in real estate. She's got, we have a few doors in her name too. No. We've got that. But I know we, I know we want a new primary too. So just kind of the one we're in. Well, the, the second one of house actors, we should just stay there, but she went back to school. So she was away for a couple of years and, uh, I roommate passed away. And so I decided let's, you know, let's get rid of this. I was kind of time in the market. I, you know, I thought that's, you know, 2017, 18,

16:29when things started slowing down. Yeah. Um, so sold that. Body rehab, we're in. I guess it even discussed that it was, uh, um, two story house, the second story fully burnt off. Yeah. Fire. So that's where we're living now. It's a house is fine, but it's definitely not. Definitely. I dream house, but it checks all the boxes for now. But it's definitely, we would like to, we would like to move. Yeah. Well, what? Yeah. So let's talk about that. So again, one of the things you could do. Obviously, this is, you probably know this, but for the audience, because it is your primary resonance and you live there two years. At the last five, you can sell that. And because you're married, take 500K and equity tax free. Yeah. So that's, that's the congratulations. That's your down payment for the, for the forever home. That's what I see. Yeah. But a pure, pure business decision, it costs us nothing to be here. You know, we got that. I know that whatever 1.8 interest right now. No. Jesus. Actually, I don't think it's, I shouldn't say that. I don't think it's, what is it? I have an ex to me.

17:30I should, I should know that it is. Even if it's below, even if it's 2.8, that's crazy. Yeah. But anyhow, yeah. Yeah. Yeah. So that, a pure business decision, just waiting when it. Yeah. No. When we, we look at suffering, like it's going to double or triple. What our nut is right now. Sure. Yeah. So. That's right. Yeah. Yeah. Those are, that's an interesting business decision. Stay here and live on 8 or move and go to 12. Yeah. 10 or whatever it is. Yeah. Yeah. Yeah. So the other thing I would tell you to work on and I think you said it already is. You are kind of all over the place. You have experience in lots of different markets. I do think to kind of get the rust off, you have to pick one. Yeah. You know, pick one where you have a footprint makes sense to me. You don't need a, you don't need a fourth or fifth market. You have plenty of markets already. You know, so that's, that's probably what you need to do is, is figure out, get a buy box, look at it every day, try to figure out the rhythm of the market. Just a, just a, just to get that skill, that memory back.

18:32Right. That's probably what I would tell you first off. Okay. Yeah. And then when you do that, the other thing that you might want to think about as you get closer to 50, is consolidating, right? You have a couple in Louisiana, one in Grand Rapids. I don't know. I don't, the only footprint I have is I have obviously the primary living in California. Three, three left in the Sacramento region that are in, you know, decent neighborhoods. They're fine. Yeah. They're fine. A lot of those. I don't have the stuff in Louisiana anymore. Oh, okay. So California and Michigan and Florida have the one in Oklahoma, but it's, I mean, requires no work whatsoever. Got it. Yeah. Okay. That's, that's more consolidated than I have on my notes. Okay. All right. Yeah. So I think it's pretty easy for you. It's, um, figure market, get a buy box. You know, figure out the rhythm, the cat, the, the yield or cash on cash return. And then only then, only after all that work,

19:33do you ask the next question of, do I want to tap equity? Right. In this conversation, I'm feeling from you, should I tap equity now? And I'm like, no, I mean, you have no idea what you're going to do with it. I'm sitting on more cash than I know what to do with right now, too. I don't need it. I'm not even near, yeah, near touching. No reason to. Yeah. I would love to find a deal sweet enough to, to have to tap equity, you know, and I'm sure maybe that time will come, but yeah, we're not, we're not there. Yeah. So that's, that's what you got to get a buy box, look at it every day, meet two new people a week. Just go back to the blocking and tackling. You've already done it several times. Yeah. Let's just get back after it. So, you know, and again, the beauty of your story is you don't have to be in a rush. Right. Sometimes I talk to guys in their mid 40s and they feel like they got a rush. I've been doing this for 20 years and built an impressive foundation. So, you know, you, you, you, you know, continue for the next four years, get two or three more.

20:33And that puts the cherry on top and at 50, you know, freedom awaits. Absolutely. Yeah. A question for you. Zero have you. Have you had a chance or did you attend Norse's latest event? Not his latest one. I, I, the last Norse event I went to, I think was two years ago when he did it. He's not really coming out to California that much anymore. Yeah. But no, I haven't been to his recent one. Did, did you go? Oh, I, I paid for it. And I was in, I was in Hawaii at the time. So I just, I haven't had time to look for the book, but I watched the videos and what his prediction is and what he felt so important to tell students. Did you hear his big take away? No, what was it? By 20, I don't know if it was 20, 29 or 20, 30. And he's not, Bruce isn't a tech guy either, right? No, he's not. He's, he's, he's, he's a, he went deep into AI. And he's, he's saying 15% unemployment. Wow.

21:33By, by 20, 29, 20, 30. And interest rates again, you know, in the ones at this point, one and a half. So he thinks, so he thinks rates are going to round trip and go to the ones. Okay, so let's play that out. So what was his, what was, so is he also thinking that we're going to have you basic income universal basic income? Yeah, yeah. I mean, he's kind of getting away, but he's, he's just tipping his toe and he's new to this. And like, he's just why eyes are wide open at the, you know, what did happen with, with this AI evolution. I love Bruce Norse. Again, I, I've, I've been to a dozen of his events, mainly in California, Sacramento a bunch of times. Yeah. Yeah, I don't know. I don't know that I see 15% unemployment by 2030. But again, he's made calls that made me a multi-millionaire. So I'm going to believe him before he believed me. And he's not, but he's not calling, he's not calling for any real price increase either. No, he's flat. Yeah, tap that everywhere. You know, even with rates going down, just with, with unemployment going that high and prices where they are now, just.

22:39Yeah. Yeah, he and I talk, we both spoke at an event that Bill Allen hosted in San Diego. I think it was. I want to say that was 2019. Maybe it's 2020. And he and I both spoke, we spoke right after each other, which was awesome to be backstage with them. It's so cool. But we both said, we both thought the decade of appreciation was over. It was just before, like, we're both like, dude, this could be flat for five to eight years. And now we're like four years into this. And I still, I still think it's flat for the next four years. Sure. We got all that appreciation in two years. And there's no other way to pay it back than just wait. Correct. Yeah. Yeah. Yeah. So let's play it out. So the other thing that's interesting is if rates go to one percent. What does that mean for real estate investors? Well, again, if you own assets. Congratulations. Even if even a price is don't go up, you can go back and just do rate and term revise. Cash flow explodes.

23:39It also means multifamily. Do you know what that really means for multifamily? That means this next pain cycle. You know, the next 18 months. You know, when cap rates are at seven. It's going to be a great time to buy because cap rates will go back to four and a half. Right. So it just played that out of my head. It's like, wow, this could be interesting. Yeah. So very cool. All right. Lucas, any last follow up question or comment you like to share? No, no. I'll keep appreciate the content you put out there. So thank you for that. I appreciate you, man. Thank you for being a part of school. I appreciate you being in there. And thanks for saying yes to talking to some stranger on the internet. Absolutely. All right, man. Take care. Goodbye. President Barack Obama. Virginia. We are counting on you. Republicans want to steal enough seats in Congress to raid the next election and wield unchecked power for two more years. But you can stop them by voting yes by April 21st.

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