I want to share a personal story today.
In 1998, almost 25 years ago I moved to the US alone with two 70 lb bags and no money of my own except $3000 I borrowed from my sister to have some capital to set myself up and get started as a grad student at Texas A&M University in College Station, TX.
In 2000 I moved to Austin, TX and got a first job in IBM for $65K a year, and bought my first car – a Nissan Pathfinder. I was ecstatic and felt I had ARRIVED lol!
The usual immigrant story so far…nothing interesting! This is where life took a drastic turn!
In 2005 I celebrated my only daughter’s first birthday in a cold sterile room at St David Medical Center in downtown Austin after she was diagnosed with “Left Ventricular Non Compaction Cardiomyopathy” and was listed for a heart transplant.
I had never known uncertainty like that EVER before nor have I since.
It changed everything. My ability to handle risks. My ability to handle uncertainty. My ability to continue not just living but thriving in spite all of it.
In 2008 I had to start over again after a very painful divorce and a very sick 3 year old daughter in tow. I walked away with $50K in my retirement account (thanks to the Great Recession stock market bust and having to split my 401K with my ex!) and $50K in cash after being bought out of a house we owned and lived in before the divorce.
I was ready to start over and ready to invest.
In 2009, I chose to buy a rental house for $98,000 in Manor, TX when no one wanted to buy houses. There were literally 10 foreclosures on every street where I bought my first house.
Was it scary? Hell yes. But I did it anyway. Despite the uncertainty. Despite the fear.
Fear is paralyzing. Fear makes people NOT want to take action. Fear makes people want to sit on the sidelines.
In 2022, I bought a custom-built Porsche Cayenne and literally spent 6 figures on a car! I had my passive income paying for this car. I don’t think the 22-year old me who moved to the US broke as hell could have even imagined I would be able to do that.
I’m not sharing this to brag but to share this very important learning in my life-
Our life is simply a product of our choices
It’s simply a reflection
Of how we overcome our limiting beliefs
Of how we deal with risks and uncertainty
Of how we conquer our fears
Of how quickly we can make decisions and act on them.
If I had to pick one attribute that has served me the most in my life and helped me retire early and be able to create $20,000 a month in PASSIVE INCOME right now, I would say it’s simply having the COURAGE to take action DESPITE the fear.
As Warren Buffett famously said “Be fearful when others are greedy, and be greedy only when others are fearful.”
Most people get greedy when the market is on a HIGH and fearful when it’s time to take action! It’s counterintuitive.
With inflation being record levels the price of inaction is more than the price of action. Money sitting idle is money worth less and less every month. Money you’re losing every month.
I’ve seen people buy crypto at $65K. I’m seeing people NOT buying crypto at $20K. It makes no sense to me at all. SIDE NOTE: I do personally believe in crypto and will continue Dollar Cost Averaging (DCA) and buying it through the dips and believe it will edge towards $11K as the bear market continues. But that’s a topic for another day!
What we are going through right now is a forced cool-off of the economy with the only tool available to the Federal Reserve to control inflation and the rising cost of EVERYTHING! This is a much needed reset for us in Real Estate because we have been on a 12 year high. This is unsustainable and unhealthy for any economy. Markets are cyclical and there are no exception. What goes up must come down and vice versa.
Some key strategies we use to continue buying despite all the uncertainty –
1) LOCATION – We buy solid properties both land and apartments in GREAT locations. Great locations will continue to thrive despite recessions. A demographer once spoke at a webinar I attended. He said “Money Follows People” and this is something that’s stuck with me throughout my real estate career. Is the population growth steady and is it expected to continue in the longer term despite short-term fluctuations and an impending recession?
2) ASSET CLASS – We buy (and build) multifamily and other recession-resistant assets like Senior Living. Multifamily continues to perform through recessions because we have more renters than buyers in the market when interest rates go up and fewer people can afford to buy.
3) INTEREST RATE CAPS – We get caps in place on interest rates so we can limit our interest rate increases and keep our cashflows more predictable.
4) HEALTHY CASH RESERVES – Healthy cash reserves are necessary to operate any business and tide through the storms and real estate is no exception. A business that is not well capitalized is a business that is likely to fold when things get tough.
5) LONG-TERM OUTLOOK- Real Estate is a long term investment strategy. You are not going to walk away rich in a few weeks or a few months. You’re going to build wealth slow and steady. You are going to save on taxes slow and steady. If you’re not a long-term investor and you want a “get rich quick scheme” you should look elsewhere. We look at what makes sense long term and how we can take the least risk to make the most returns.
