Jeff's Investment Portfolio - 3 Critical Takeaways

0:00America leads the world in medicine development. It matters. We get new medicines first, nearly three years faster. Five million Americans go to work because we make medicines here at home, and not relying on other countries keeps us safe. But China is racing to overtake us. Will we let them? Or will we choose to stay ahead? When America leads, America cures. Let's tell Washington to keep us in the lead. Learn how at americancures.com. Pay for by Farma. This episode is brought to you by Indeed. Stop waiting around for the perfect candidate. Instead, use Indeed sponsor jobs to find the right people with the right skills fast. It's a simple way to make sure your listing is the first candidate see. According to Indeed data, sponsor jobs have four times more applicants than non-sponsored jobs. So go build your dream team today. With Indeed, get a $75 sponsor job credit at Indeed.com slash podcast terms and conditions apply. Alrighty, folks, something I look forward to doing this year is having a hundred

1:03conversations about portfolio reviews. We are about to go through number three. So we've got 97 more to go. Number three is going to be with the one and only Jeff Jeff. How you doing, buddy? Great. I'm doing very, very well. So let me kind of summarize what I know to this point, Jeff, what you shared with me. So we kept the audience up. And then I'm just going to let you ask me a bunch of questions. And we'll see where this goes. You ready? Yep. You bet. All right. So first thing I want to congratulate you on is you know what your monthly, what I call your monthly nut. Some people call it burn rate. Basically, what it costs you is a family to live each and every month. And you wrote that down is 5,500 to 6 grand. That, you mean, that line item is the most important thing. I think most people need to figure out. Because from that line item, and we'll just call it 6 grand. So the math's really easy. You and I can start talking about how do we get Jeff to 12 to 15 grand in passive or semi passive

2:04income? Because we are not here just to cover our monthly nut. We want to 2x or in this case, 2 and a half x that. So all of our conversation for the next half hour is going to be okay. How does Jeff most efficiently get to 12 to 15 grand? Because again, there are surprises and vacancies and things break. So when I look at the numbers you shared with me, that was where my mind went. First, second, you have a portfolio today would put you in the multi-millionaire status. You have 24 units. If my math is right. So 34, but I have two actually two entities. One with my brother, we have eight. My wife and I have 26. Okay, so you're just call it 30, right? So we'll split your brothers in half, you and your wife together. So we'll call it 30 units. Thank you for that. So when I look at that, and I look at what the stated goal is, we'll just call it 12 grand for an easy conversation. My first thought is you have enough. It's about how can we tweak the

3:08portfolio, manage the portfolio, operationalize it? Because you know, you don't have to have more, right? I do believe you can have 30 units. And over the next couple of years, get to that 12 to 15 grand. That's just, that's where I start. That was where I first went, but I'll let you stop me there and ask questions. Absolutely. I agree. We, the most recent acquisition was in July. And so we're still working on stabilizing and optimizing that one. And I think I told you before, we weren't planning to have three units to rehab anywhere in February. So we're going to be laying out $50,000 for that, probably. And of course, that's going to affect our cash flow. And for sure. In effect, our personal life's time, because we have reserves. We just work plan to spend on this. And so far, we've done all of that. We rehabbed one. It's almost finished. And we've done that all out of cash flow. And that includes spending, you know, $8,000 for a new

4:14central HVAC system instead of electric baseboards. He paint in the whole place and put in new flooring and rework in the kitchen cabinets. And so yeah, we're, we're, we're feeling pretty comfortable. I think we were in a place where it was really good. And we decided to just extend a little bit more on those 10 units. So yeah, well, I think I think when we look back in 24 months, that that 10 units is going to be what makes the rest of your life really comfortable. Anytime you pick up a new project, certainly something of that size, it just comes with its own surprises. And again, sudden, sudden vacancies are part of that no doubt. But I think when we're together in two years, you know, 20, 28, those 10 units are going to be what put you over the top. So I think it's going to prove to be a pretty good move when I look out into your future, because that, that, that 10 got you to 30. And now, you know, structuring the portfolio to get to 12 grand.

5:18Frankly, it's going to be a lot easier. It would be harder. You'd have to pay down debt probably more aggressively in operation, lies it a lot more. But now you're at 30. I think the path to 12k passive is, or semi passive is a lot easier. So I think it will, I think it'll prove to be a good good purchase, even though maybe the first, you know, six months is like, ah, another one. Yeah. But we plan on doing rehab and all of them when we just didn't plan on three this month. It happens. It always happens in threes. The other thing I see in your question, and let's talk about this is you're talking about potentially getting out of one part of town and moving to a different part of town. It sounds like that would be 1031 exchanges, but I don't want to put words in your mouth. Yeah, ideally, we would 1031 from our older stock that, you know, 100-year-old buildings that are interstating, you know, a little bit tougher to ran, a little bit tougher crowd, a little bit lower productivity. Sure, into another

6:19purpose built, intentionally built, whether it's like up and down apartments, like the ones behind me, or townhouses, but probably be ideal. So that would be, yeah. So I fully blessed that you obviously know Libby and I are looking at some of the same things. We're looking to, as we get older, you know, we want to have, we want the age of our average property to drop quite significantly. Right now, it's got to be over 60 years. It might be 70. I haven't done the math in a while. But that's, those just come with their own challenges, right? They're just old and tired. So I think making that move is interesting, and I'm going to guess they're all residential, right? So they're all duplexes or triplexes or quads. Correct. We have one single family house. And I only bought it because the guy that I bought a portfolio from was selling it and it was attached to a duplex that we already owned there. So it kind of made it into a triplex. But yeah, I got you. We avoid single family

7:27homes because we want to see people getting on to the property ladder and tried to implement some things with our tenants to encourage and support that. You know, we help them out with, you know, if you let us know that you're moving, we'll help you out with the security deposit and do an early review and assist you. Yeah, I mean, the house they're usually a little bit better quality than. Well, that's wonderful. I love it when landlords are solid and good people. And as you know, not all landlords are. There are plenty of slim lords out there. So to hear that you're helping your tenants on the property ladder is very encouraging. But yeah, I do think, you know, again, you know, I can kind of see your future, right? You're going to be able to get to, you know, that 12k number with what you have. I think, I think strategically maybe one a year. I wouldn't be in a rush, but one a year kind of move chips from the inner city older to net newer. So in the course of four years, all the inner city stuff's gone.

8:32You know, so now it's 2029. You have newer stuff. You know, it's now operationalized and you know, you'll probably be at, you know, 12k easy if not 15,000. And, you know, from there, it's party time, right? Life is good. Yeah. Yeah. So what other questions did you have for me or thoughts that you want us to kind of riff on? So do you think having this 10 minute in July or August, the settlement was July 31st actually? Do you think adding this 10 unit kind of resets the sock a little bit? You know, we, we were in seven or eight years. I could see that we were coming out of the sock and we were going to, you know, being in really pretty shape. But now that I've added this one, it kind of feels like some of the socks come back. So that's a great question. Again, anytime you pick up something that big and it's certainly bigger than anything, you know, it's two and a half times bigger than anything else you own, right? So that's,

9:34that's big. There is absolutely a year of sock that comes with that because it's, there are surprises, right? For example, you have three vacancies in very short order, which, frankly, as somebody who owns a bunch of these, doesn't surprise me. Anytime there's a new owner stuff happens. So it probably resets you a year, but nothing more than that because as you've just highlighted, you're able to get through with that with just cash flow, which is most people couldn't. So again, it's not like you've gone back to year five, you might have gone back to year seven, but I do want to highlight again. I think this 10plex will be the thing that catapult you faster. Like, so year seven is going to feel like year seven, but year eight, nine, and 10 are going to feel like two years. So I think there's an accelerant on the other side of the sock. So again, I really do believe 24 months from now, when you and I are talking again, you're going to shake my hand and go, you're absolutely right. That 10plex was the thing that

10:35put us over the edge in the edge in a good way, right? It got us there more concretely. But yeah, I do think you're going to have a little, you know, you're going to go, you're going to go backwards before you go forwards, I think. Yeah, that's why we bought it. That's propellers forward. Yeah, so I think it would, I think again, I really do think in 24 months, you're going to, you're going to look at that 10 10plex is the thing that set you free. So I think in that net, it'll be a huge positive. Awesome. You're like it probably all of your properties have built in air conditioners, right? No, funny enough, not all of them, probably 60%. But no, we have some window ACs and now doing a in-room or whatever those are called. Yeah, dual packs or whatever, yeah. But like the air, the air condition is that you find in a hotel. Yeah, it can be some of them. Yeah, we looked at a property that was six efficiencies on three floors to have all of those

11:38window pack kind of air conditioners. Yeah, I mean, I'm in a market where the summertime, those things can't keep up. Anytime it gets above 100, those window ACs are completely useless. I have looked at re plumbing properties, but most of them are built so long ago. It's impractical. Some of them I've taken to roof mounts, but that's really expensive as well. But yeah, it's, yeah, when it gets over 100 degrees, those little window ACs can't keep up. Right. Well, so that the 10 flux that I have in my background picture there has all electric base for heat. And so we're, I hate seeing those window units in the window. And yeah, this looks ugly and tenants don't take care of them right. It drips water and ruins wind walls and buildings. Windows sales and yep, yep. Yeah. So as we're working on remodeling and rehabbing these, I've been wanting to add central AC and heating systems. And so the first one we did cost us

12:4481, 45, I think, for the system. The next one's going to be closer to 10 grand because it's a second floor and they have added the attic. But I think, I think that's what you do this year. So you just operationalize that 10 flex. So it's a lot easier to rent. Those would be much easier to rent long term, less headaches, less capital investment, long term by doing that. So again, you're in that year going backwards, but long term, you're doing the right things. Yeah. Fortunately, when we looked at the property and did our inspection before settlement, we discovered that the roof was totally shot. And so the seller put a new roof on it before we got it. So I don't have to worry about roofs for 30 years. That's a big thing there. Yeah, absolutely. Yeah. It doesn't never sucks to have the past owner put on a new roof right before closing. That doesn't suck. Absolutely. Absolutely. Yeah. Well, I'm curious one thing in your story

13:46that I didn't see. When did you make your first rental purchase? How far, how long ago was that first one, Jeff? That's an interesting path of weaving. My wife and I purchased a duplex in 1984 and lived in one and rented the other. Oh, the original house hacker right there. Yeah. Before it was everyone called house hacking. That's that's what we did about one. One. I grew up. My father was buying real estate since I was, you know, well, we little one. I remember he bought a fourplex or in Hagerstown, Maryland. Okay. And I remember he added two apartments in the basement. Nice. And I was working on him. You know, I nailed two by fours to the floor and spilled 10 to paint all over the place. But so I've been exposed to it since I was, you know, awesome. A wee kid. So when my wife and I got married, that was the

14:50number one goal I had was for us to buy a place to live somewhere and we bought that duplex. And we carried that duplex for quite a few years. Then I rebought a house and I was self-employed and was working on my own for, you know, probably 20 years. And one year I lost my three biggest customers. And so my income went from 250k a year to 25,000 a year. Now it was, you know, 10 years ago, 15 years ago. So it cost the living was lower and it was certainly easier to live on less income than I have now. That's still hurts. You know, we really took a beating end up filing bankruptcy. We never actually followed two with the bankruptcy. But we had to sell that duplex. So we were going to lose it. And we had fortunately, we had family financing refinance our house. So we didn't lose our house. But

15:57we really took a beating that year. And then I just made a commitment to do pick up some contracting work to add to my business, my side hustle, which I still kind of do. And it makes me multiple five figures every year, even though I have a full-time W2 job right now. I took a contract position that was supposed to last for six months and it turned into a full-time job that lasted for 10 years. And the project that I've been working on those 10 years was supposed to be done in six months. It only just, it only just ended a month ago. So now I'm looking for a new project to work on when I'm working, but sustaining me and it's helping us to make some significant savings in addition to the real estate investing. So all of this real estate and all of my 401K,

17:00those funds have all been acquired since basically 2017, 2016. So eight years, oh no, what would that be? Well, let's call it 10 years. That's almost 10 years. It's eight or nine years, yeah. Yeah, because again, I always tell people, you've heard me say this, but for the audience, I always say that getting wealthy is a 10-year journey. It doesn't matter when you start, right? It takes what it takes and it sounds like you're living proof of that. Yeah, I didn't realize really how good it was until I sat down and started writing down these numbers for you. I just kind of try and keep taking care of stuff and trying to make sure that the bills are paid and that we're making the right moves. And I have like paycheck deposits, you know, so I never see the money going in the 401K. That's awesome. So I'm like, I'm really glad I got all these numbers for you out of

18:01curiosity, because it gave me a whole different perspective on where I'm really at. No, you're right there. Again, I think you're at year eight, you know, maybe you go back to year seven with this 10plex, but again, I think I think you get to year 10 in two years regardless of we're splitting hairs. I really do think, you know, 20, 28 will be the year you look back and not only will your net worth probably be up another seven figures, but your cash flow, your semi or passive cash flow will be in excess of 12 grand. And, you know, that's where life really gets good. You really can decide what you want to do when you want wherever. So my encouragement to you is, you know, keep going what you're going. You don't need any more. You have you have a great number. You know, get through this, you know, period of suck with the new 10plex. And if you want to, you know, 1031 out of the inner city into the other area, full blast, but I think you've got a good plan and a good base. And my encouragement is, you know, keep going. And, you know, frankly, don't do

19:02anything stupid. Right. Awesome. That's the important thing, right? In life, don't do anything stupid. Don't do anything stupid. Yes. I've done my show stupid. It's time to be over that. Say, we're well, we're mature enough where we don't do those things anymore. Yeah, sure. I'm old enough to know better. Don't better. There you go, Joe. Any last questions as we wrap this up. Thank you for being number three of this portfolio review. I had so much fun doing these. Yeah, I can't think of any specific questions. I loved the Las Vegas last weekend. That was awesome. I had a great time. The one thing I kind of, and I think I told Dion this when he interviewed me. The one thing, I don't, and maybe I'm just because it's high on my mind. Sure thing that I don't hear you talk enough about, I think, is people's purpose. Yes. What's the purpose of this? Why are you really

20:03doing this? Because, you know, if you're just doing it to try and make $10,000 or whatever, that's not going to sustain you through the sock and the shit and the toilet and the hazards and the rehabs and all that crap. You know, you really got to have a deeper purpose. And part of my wife and I are a purpose is to try and help people in the margin. You know, that I realize, you know, it adversely affects our cash flow and our income time to time, trying to help people in the margin. But it's more important to us, you know, like I was talking about tenants getting on the property library. Yeah. That's more important to us. And we, you know, currently we have enough. I have a good W2 and like you say, I think in a couple of years, this is going to sustain us. Yeah. Yeah. Yeah. I agree with you. I watched that interview. It's actually loaded. I think it'll go out in the next couple of days. But yeah, your closing question or answer to Dion was about purpose and I definitely wrote that down. And I think you're

21:07absolutely right. I do not talk about it enough. I talk about the first five years sock, you're absolutely right. But I should do a better job of tying in how to get through that. And for most of us, it is that purpose, right? It's the thing that, you know, makes the hard days just, they're just hard days and you keep going, right? And and you're better for it. You learn the lesson and move on. So yeah, I took your, I took your feedback. I wrote it down. I'll do some writing on it for sure. I certainly need to talk about it more because it's, it's important. So I appreciate that feedback. You bet. Awesome. Well, Jeff, you're amazing. You enjoyed our time together. It was great talking with you and great meeting you. And I look forward to talking again in two years. Oh, yeah. I'm sure we'll talk before that. But yeah, I hope to see in Vegas next January. So I'm sure. On the calendar. Jeff, you're amazing. Thank you so much. I know I won't sell them to August 1st. I always open up tickets on my daughter's birthday. So yeah, I want to beat Mark. I'm going to get my ticket

22:09before Mark because he was such a bully about why don't you go in? Well, you know what? I'll text you first so you can get it first. I'll let that. All right, Jeff. Take care yourself. Have a wonderful day. You too. Bye-bye. Bye-bye.