Busy professional cash flowing 13 properties in 12 months sounds good to be true! Well, in the case of Tim Ostrom, it’s true. Discover what impact Robert Kiyosaki’s Rich Dad, Poor Dad has had on Tim, his process of acquiring turnkey properties through Cash Flow Savvy, what a 1031 exchange is, why you should establish it before the sale, and Tim’s opinion on his “too good to be true” situation.
What You Will Learn About Busy Professional Cash Flows 13 Properties in 12 Months:
- The impact Robert Kiyosaki’s Rich Dad, Poor Dad has had on Tim
- The importance of financial freedom to Tim and his wife
- The new milestone that Tim’s wife achieved
- Why Tim needed 5 years to jump into his first investment
- Tim’s shift into turnkey investments
- Tim’s process of acquiring turnkey properties through Cash Flow Savvy
- What a 1031 exchange is and why you should establish it before the sale
- How many properties Tim purchased in the first batch and how much he cash flowed with it
- How Tim bought the next 5 properties
- Tim’s opinion on his “too good to be true” situation
- Tim’s biggest challenge that he had to overcome during the turnkey process
- What would Tim do differently, if anything
- How stressful it is managing 12 properties in 3 different markets
- How Tim would advise turnkey newbies
- Why Tim chose Cash Flow Savvy
Whenever you’re ready, here are a few ways we can help:
Work with me One-on-One
If you’d like to work directly with me on your business… go to REIAce.com, share a little about your business and what you’d like to work on, and I’ll get you all the details!
- Would you like to meet in person? Our next live event is right around the corner! Go to EpicIntensive.com for the details.
- Become an Epic community member at The Epic Real Estate Investing Show
One of my favorite things to do is share with investors the latest and greatest tactics and strategic friends I make. I do it every week and you can listen in by subscribing to The Epic Real Estate Investing Show podcast on iTunes – Click Here.
- Grab my book, Epic Freedom ($1)
I frequently hear from people looking into investing in real estate for the first time, “How long is it going to take?” So much so, I wrote a short book about the 2 easiest and fastest strategies to a paycheck in real estate. You can grab a copy for $1 and I’ll pay the shipping – Click Here.
- Join our Badass Investor Program and be a Case Study
I’m putting together a new Badass Investor case study group at Epic Real Estate this month… stay tuned for details. If you’d like to work with me on your real estate investing, go to FreeRealEstateInvestingCourse.com to get started.
- Also, check these out:
Thank you so much for joining us on this episode of The Epic Real Estate Investing Show! Please subscribe to the podcast so that you will get instant access to our new episodes.
If you found this podcast helpful, please take a few minutes to leave us a positive review in iTunes. Your reviews help to improve our search rankings so that we can spread the love. Thank you!
Speaker 1: This is Theriault Media.
So, you want to be a real estate investor, but you don’t want to do the work. If there were only a way where someone else could do it for you. Now there is. Tune in here each and every Saturday on The Epic Real Estate Investing Show for Turnkey Saturdays with your host Mercedes Torres.
Mercedes Torres: So, ladies and gentlemen allow me to introduce without further ado, Mr. Tim Ostrom. Tim welcome to The Epic Real Estate Investing Show our turnkey portion. Happy Saturday to you sir. How are you?
Tim Ostrom: I’m doing great. Thanks for having me, Mercedes.
Mercedes: Oh. You’re so welcome. I’m so delighted to have you on our show, Tim. You are an exception to the rule. I’ve said that to you before. I remember speaking the first time on the telephone and now I don’t know 12 properties later. Here you are. So, let’s start off by introducing yourself. Tell me a little bit about who Tim is and what you’re all about.
Tim: Sure. So, I’m 36 years old married to my wonderful wife Laura, she’s also 36. We live in Los Angeles, but for those that are closer to the area Inglewood specifically. We have two small children, one that’s almost three years old and one that almost one-year-old and we’ve been living here for about let’s see since 2004, and we got started … I’ll say interested in real estate … I first read the book Rich Dad Poor Dad in 2004 that’s what got me interested in real estate and in 2004 is also when I started working at the company I work at now. The company is Raytheon. I guess you can call it kind of a 9 to 5 job, which I thoroughly enjoy doing, so that’s when we first got interested in real estate and then since this is related to real estate I’ll say it was about five years later until we made our first real estate investment, which was a duplex here in Las Angeles. That’s just a little bit about me and my background and you know where we’re at right now.
Mercedes: Awesome. Thanks for sharing. So, you mentioned that’s your 9 to 5 and I will say again you’re an exception to the rule because you actually enjoy your job from what I understand. You know I speak to so many people that say “I hate my job. I want to get out of the rat race.”, but you’re a little bit different because you actually enjoy your job, but you did mention something that is mentioned quite a bit on our show is you read the book Rich Dad Poor Dad and that changed everything. So, tell me what in that book attracted you and really why real estate.
Tim: Yeah. I think the big … it’s true that I do love my job, but I also really like the idea of having the freedom of not needing the job.
Tim: And that’s kind of the … that was … when I read the book my only jobs I had, had were I’ll call it service industries, I used to work at Burger King for example, so I had never until I had this job I never had a job that I actually really enjoyed, so that’s what really got me interested in it. The job I have now I’ll say it was a pleasant surprise that I enjoy it and that’s great, but I also like the idea of having freedom, financial freedom at least and same thing with my wife. So, maybe we’ll get to talk about this a little bit more, but my wife she also … we went to school together, graduated together and where we’re at now is she would like to become a stay-at-home mom and not have to work anymore and that’s why we got interested in really I’ll say ramping up Castle Cash Flow to enable that, and the great news is we actually did that. We achieved it. Last week was her last week at her job, so today she is now –
Mercedes: Oh my God. Congratulations. I didn’t know this Tim. Oh. I was about to mention something about being a stay-at-home mom, but congratulations Tim that is a really big deal.
Mercedes: That was from what I understand one of the original milestones that you and I discussed when we had our first call. Was it not?
Tim: Yes it was.
Mercedes: So, you hit the milestone. Whoo! That makes me so happy. Very cool. Okay, so she quit her job. I hope that you guys celebrated with I don’t know an over the top dinner and a bottle of wine. That’s just how to do it.
Tim: That’s exactly what we did.
Mercedes: Awesome. Awesome. Okay. So why … Now I know why real estate. What you mentioned, I read the book and I took me five years to jump into my first investment. Why’d it take so long? Just out of curiosity?
Tim: It was a couple things. One of them was I’ll call it slow and steady, maybe [inaudible 00:04:50] in hindsight maybe overly cautious, but the biggest thing was actually market dynamics. So, we live out here in Los Angeles, we started working in late 2004 and by the time and by the time … and we bought our primary residence where we’re recording this from right now here in 2005 and then after that what we did was by time we had saved up some money for a down payment on our first investment property –
Mercedes: Mm-hmm (affirmative).
Tim: Duplex the market was extremely high, and I had done enough research, and I’ll say basic education to know I wanted to buy based on some decent cash flow and at the time when we were looking at things that we could afford a down payment on here locally the cash flow numbers were very poor. Properties barely cash flowed if anything, so it was basically like nothing looks good. Waited and waited and waited then the market came down, prices came on down. Rents did not now all of a sudden the cash flow numbers looked reasonable.
Tim: And then it was in 2009 was when we bought … yeah, it was 2009 was when we bought that first duplex.
Mercedes: Yeah. So, 2009 was a great time on our market. You’re right. I’m lucky Tim. I am local in your market. So many of our investors are local in that we live in LA and it’s so difficult to cash flow in the Los Angeles really southern California market, which is one of the reasons why this turnkey operation started, just because it’s so difficult to cash flow here, so I understand your dynamic. So, you bought the duplex, you held it. You held it for a little bit and then you decided that, that wasn’t working so much. What happened that you decided okay we’re going to sell this and buy turn key properties?
Tim: Yeah. So, to get pretty specific we bought that first duplex for two hundred and sixty thousand.
Mercedes: Mm-hmm (affirmative).
Tim: 2009. It appreciated I don’t remember how much, but after maybe three years or so as the prices had run up, and we did a cash-out refinance, pulled out some cash and then invested that in some other real estate investments and Castle investments and kept it going, and it kept going up, but then shortly after or I’ll say shortly before you and I first spoke so, it’s probably 2016-ish. I was kind of evaluating the numbers, and we’re basically sitting on a whole bunch of equity, but the cash flow is really low. This duplex is putting maybe three hundred … yeah about three hundred dollars per month into our pocket actually not even that, probably about 275 once you numerize it out and so we look at the cash flow on the equity it’s just not very good. That equity could be used much more efficiently in high [inaudible 00:07:37] market. That was the [inaudible 00:07:40] interested in turnkey properties in better cash flowing markets.
Mercedes: Awesome. Yeah. That’s … you nailed it. So, lets fast forward. You decided okay I need to start looking at passive income. Why Cash Flow Savvy? How did you find us?
Tim: So, I first got introduced to you and your husband Matt when you guys were on a panel discussion here in the Los Angeles areas For Investors By Investors and the topic was … I think it was How to Market Real Estate Deals. Do you remember this?
Mercedes: I do. [crosstalk 00:08:18]. Yeah, we get to speak at our FIBI groups quite a bit. We love our FIBI groups in Orange County and LA. We do a lot of traveling, so yeah I do remember it actually.
Tim: Yeah and so I didn’t know either of you before that. You guys did an awesome job on that panel by the way. That was really educational and informative and then that groups known for having really good panel members, so you guys lived you up and exceeded that expectation.
Mercedes: Thank you, sir.
Tim: And that was really good timing because I had already started doing a little bit of research on turn key companies maybe six or seven in total and actually talked to and interviewed a total of four and I also had already selected my mortgage broker and was talking to her about what I was planning on doing and told her who I was working with and she was like, “Yeah. We’ve worked with them before. Yeah, we’ve worked with them. Yeah. I worked with them.” And she said, “Have you heard of Cash Flow Savvy with Mercedes Torres?” And I was like, “Wow! It’s funny you should say that. Last week she was on a panel at [inaudible 00:09:22] time.” She was like, “You should check them out. They’re awesome. They’re really good. We have nothing but success with them and seems like investors do really well with them.” I said “Oh. Cool. Thanks for the tip.” I’ll call that a third-party endorsement and then probably a couple days after that is when I reached out and contacted you.
Mercedes: Awesome. So, you reached out and contact me. First of all, how did you reach out to me? Was I accessible?
Tim: I’m sure it was e-mail because I do everything via email. I’m sure that’s how it started.
Mercedes: Awesome. Awesome. I do remember our first conversation and I do remember, “I met you at the FIBI group.”, and I thought “Honey there were a hundred people there.” So then we started speaking and then I do recall meeting you and I thought “That’s pretty awesome that he’s actually practicing now what he’s been learning for the last six years.” so, it was a breath of fresh air to actually see somebody taking from Rich Dad all the way to buying a duplex to understanding it’s not making me any money let me turn this into cash flow so I’m honored Tim that you chose to work with us, so thank you for reaching out. Okay. So, let’s fast forward I know this is going to throw people through a loop because when I met you, you I think had two properties in the LA area of which one you were selling. They were both investment properties if I remember correctly and now you have 12 investment properties.
Mercedes: Is that correct?
Tim: Yeah. That’s correct.
Mercedes: Awesome and so did you acquire all 12 through Cash Flow Savvy?
Mercedes: Awesome. Okay. So, tell me what that process has been like. Tell me why you decided to do the way you did it and I just kind of want you to share your experience because again I’ve mentioned it a couple times, you’re an exception to the rule, but I love that what you did is extremely tangible to everyone, so share your story.
Tim: Sure. I’d be happy to. So, let see you talked about we’d already had this first call, and I think on that first call you walked me through the process about how it works. Explaining how I’ll say from the beginning to end. All the way to when properties will start showing, to evaluating and deciding yes or no, talking about contract and the whole process.
I actually remember it pretty clearly because I was on vacation with my wife, and her family in the Gulf of Florida when we got to the point where the properties first started flowing in, but just reverse a little bit before that. We had that duplex I talked about that very first duplex was for sale, and it was scheduled to close somewhere around the fourth of July last year in 2017 and so we’ve talked little before that, and you said, “Okay. When you get a little closer let me know.”, and it was probably a week or so before closing. What you did is started sending emails my way with potential properties and the way that looked from my standpoint is I’d get an email from you, it’d be some links for some possible properties and I’d click on them it takes me to a nice little web page that has all the information, the numbers which I’m clearly a numbers guy, so that’s right where I’d go to.
Tim: Afterwards and then I really liked it my wife would say, “Okay. Now let’s see the pictures.” Then we’d look at the pictures.
Mercedes: I love it. Usually, Tim, it’s the other way around. The wife looks at the pictures first then the husband looks at the numbers, so I love it.
Tim: Yes. That’s probably because it came into my email so I got to [crosstalk 00:13:09]
Mercedes: Got it. I love it.
Tim: But one thing I forgot to mention that was really important was we had talked about because I was doing a 1031 exchange in that first one we were expecting when we sold our … we were expecting our gain on sale to be somewhere between hundred and seventy-five, hundred and eighty K and come out of it and one thing I wanted to have some competence in is that there’d be enough properties identified quickly in that time period and you said, “Yeah. I don’t think that will be a problem.”, and you were right that was definitely not a problem. You sent in a couple batches and they all looked really good and I looked through and picked out which ones I thought made the most sense or I liked the most for various reasons and then reply back to you, yes or no, yes or no and then from there it’s pretty straightforward. We put it under contract so
It’s pretty straightforward. We put it under contracts so I think the next step is I get an email link from you with DocuSign stuff and we go through and sign the usual contract documents, which was super easy and efficient because, like I said, I did this all while on vacation, from a laptop, out of town, and just clicked through all of it. Now we’re on contract and trying to remember the exact order, but in that first batch, there were seven properties total. It was spread from between Birmingham, Alabama and Indianapolis, Indiana and we had also looked at some properties in Saint Louis, Missouri that also looked really good and we talked about, we kind of want to bundle it, limit to two cities so those are ultimately the two cities we went with. Then shortly after that you introduced me to one of your teammates, Melissa, and I forgot what title you used, Transaction Coordinator?
Mercedes: That’s exactly right. She’s a Transaction Coordinator, which is a person that holds your hand through the entire process to make the process as seamless and as painless as possible so hopefully, Melissa or Ashley, is who we have doing that, helped you. I think that considering you were on vacation she helped quite a bit setting up inspections and appraisals and all of that for you. Is that correct?
Tim: Oh, yeah absolutely. That was something that was really valuable also and saved a lot of time is that you guys have provided a list of I call them, recommended service providers, like inspectors that you had good reputations with, the background, insurance brokers and a couple other things. I used inspectors that you guys had good experiences with before, as well as one of your referrals for insurance, which was really good, which we’ve used for all of our recent, all twelve of the properties that we’ve invested in. That was very helpful.
The inspection process was really smooth and efficient. Recall I’m out-of-state, so I’m in California, these properties are in Alabama and Indiana. Previously when I purchased properties, where I’m the person buying them, they’ve all been local so things I could go to and see myself, not the case with these ones. The process was the inspector, the inspectors, one in Indiana and then one in Alabama and then later, on the next batch, one in Ohio, Cleveland, Ohio. For all of them, they would go do the inspections, send the inspection report, and then I’d get on the phone with them and ask them questions about it. They walk through and they were excellent, very professional, and then it helped me see every little kind of detail in question they answered about the property.
Mercedes: I love it. I love it. Okay, so let’s take it a step back a little bit because now we got into the inspection process, but you mentioned that you did a 1031 exchange with the previous sale of your investment property and to buy, to use the profits from that, to buy these new rentals. Explain to our listeners, what is a 1031 exchange?
Tim: Sure, a 1031 exchange is basically you have an investment property and you want to go sell it. If you have a gain on the sale, which we would’ve in these cases, like I said, they almost doubled in value during the time. You just sell it and then go put the money in your bank account. You have to pay taxes on it and that would have to be capital gains tax rates.
A 1031 exchange allows you to take those proceeds and then roll that into future investments without paying taxes. In the case of this first duplex, we sell the property, whatever it was, 180K of gain that comes out of it, rolls right into these seven turnkey properties. There are people that are professionals in handling the process because there’s a lot of compliance and stuff like that. We had a company, a 1031 intermediary, they’re called.
Tim: They do the paperwork. They work with the mortgage company, yourselves, and make sure all that paperwork is lying flat. Super easy. It’s signing some forms and not paying the taxes.
Mercedes: That’s exactly right. So just to clarify, the 1031 exchange doesn’t mean that you don’t pay taxes. It just means that you defer the taxes.
Mercedes: Let’s get that clear because there’s just really no way around Uncle Sam. I hate to break it to you.
Tim: Yeah, that’s right.
Mercedes: Yeah, you are deferring the taxes for as long as you hold your rentals on the capital gains. When you and I spoke, I knew that you were going to purchase these properties to hold them for almost [inaudible 00:19:03] and there’s no limit to the amount of 1031 exchanges that you can do on investment properties. Just word to our listeners, if you’re considering ever doing a 1031 exchange on a property, where you’re going to gain capital gains, the 1031 exchange has to be established before the sale, very important, because you can’t sell the property, get the gains, and then say, oh I want to do an exchange. No, you actually have to identify that before.
So, you were able to identify that. You got to the exchange company, in this case, the intermittent company, to help you with that paperwork and then I know that we worked closely with the exchange company and ourselves to make this happen because there’s no other way that this would have been able to happen. What was that experience like for you Tim, being the actual client overseeing the process between the exchange company, our turnkey, and then your Transaction Coordinator, to make sure that all the moving pieces were happening? What was that experience for you?
Tim: For me it was I’ll say, frankly kind of sit back and watch because once the introductions were made and everybody knew what the game plan was, which is relatively straightforward. Sell this property, do a 1031, buy these other ones and the people involved are all familiar with that process. They know who needs to talk to who for what, so there’d be tons of emails flying that I would be on distribution for but it didn’t require much activity for me. Occasionally a clarifying question here and there.
Mercedes: Right, there’s a lot that happens in the background Tim, so I’m so glad that it was for you sit down, relax, and watch but yes, there’s a lot going on behind the scenes. That’s the whole purpose of a turnkey is to make it as easy as possible for our clients. Yeah, I’m glad you actually got to experience that Tim because you and I have never really had this conversation after you closed.
Tell me, the first batch of properties, how many did you acquire total?
Tim: It was seven total. There were four single families in Birmingham and then in Indianapolis it was two duplexes and one single family.
Mercedes: I love it. Okay, so if you don’t mind sharing with our listeners, tell me what do you cash flow with your first batch of seven properties?
Tim: The first batch of seven is about $1800 in change per month.
Tim: Actually, this is a really good point. It’s like I mentioned before, that was coming from that duplex, which was cash flowing less than $300 per month so If I repositioned that equity, it went from 300ish, for probably no less, to 1800.
Mercedes: Yeah, and Tim you’re just talking about the cash flow. You are not talking about the tax benefits that you and Laura are benefiting from, the end of the year and from what I hear, we now have a stay-at-home mom because partly due to that.
Mercedes: Okay, so that was seven properties and what happened that now all of a sudden you have, I believe, it’s a total of twelve so there were an additional five properties. What happened? How did that happen?
Tim: Yeah, so after that first batch that went really smoothly so then we said, okay let’s repeat that or this triplex, the one we bought in 2011. Similar story. We bought that one for $253K. It had almost doubled in value so again, coming close to $200K worth of gain. We’d also, like I’d mentioned, done a cash-out refi previously on that, but same deal. That one was cash flowing probably around about 400, between 400 and 415, when you averaged it all out so we said, well let’s do the same process again. Again, I contacted you and said hey, let’s do the same kind of thing and we explored some markets and settled on Cleveland for the next market. You were seeing a lot of good potential coming up in that area with properties and it was a lot like the same process that I said before.
Tim: I wasn’t on vacation but it was the same kind of thing. Emails came in, we set up the properties and went through that whole process and that was a batch of five properties in Cleveland. I kind of know the area because I grew up in Cleveland, or just east of Cleveland, so I was even a little more educated about that market I’ll say and similar story. Sold the triplex that was cash flowing 400 in change per month and repositioned that into five properties that are cash flowing close to 1700 a month.
Mercedes: I love it. I absolutely love it. Okay, so I remember when I was creating the Cleveland portfolio. I was a little bit more strategic because I was trying to capture properties within a city but different areas and different purchase price points so that you can diversify within that city and I think that I built several portfolios throughout my Cash Flow Savvy career and I’d have to say Tim, your portfolio is one of my favorites. Every single one of your properties I would own in a heartbeat so I hope you’re really happy with that portfolio because that just recently happened within the last three months. Is that correct?
Tim: Yeah, that’s right.
Mercedes: Awesome. Awesome so what was the time difference between the first set of properties and your second set of properties?
Tim: So, the first set of properties was in the let’s see, August to October time frame of 2017 and then the last, the next batch, this batch in Cleveland, was between May and July so what is that, ten months or so?
Mercedes: That’s awesome.
Tim: [inaudible 00:25:03] properties.
Mercedes: Talking about moving at the speed of instruction, you and Laura are king and queen of moving at the speed of instruction. I love it. You took, I don’t know, a possible $500 maybe $600 cash flow into now almost a $2700 a month cash flow just by taking the money, the equity that you have acquired in your LA properties and repositioning them with cash flowing assets using turnkey. Is that?
Tim: Yes and this was like I mentioned. My wife just quit or retired. I was told we’re too young to use the word retire.
Mercedes: I love it.
Tim: Stop working and well we had laid out this plan. We said, what we want to do is we want to have cash flow across all of our real estate that equals her income and then after that then she’ll stop working and like I said, so we did those first couple properties we talked about. There was one other and then some passive investments that we did for a while and then this transition across these two 1031 exchanges, from these duplex and triplex and these twelve properties, was the turning point as I just walked through those numbers [inaudible 00:26:19]. They got us over that hump so now we have cash flow that surpasses our income.
Mercedes: I love it. Actually, I had said it was $2500. No, it’s like $3500 a month.
Mercedes: I love it. I absolutely love it. Awesome Tim. I am sure, I am listening to you tell the story, and I was part of the story, so I know that everything that you’re telling me is accurate. Some would argue that just what you experienced is too good to be true. I could hear people thinking that. What would you say to them, the people that are thinking Tim that really didn’t happen, because it was just too easy and it seems like it’s too good to be true?
Tim: Yeah, I think it might depend where they’re coming from so, I’m coming from the standpoint of, I’ve already bought some properties and closed on them. The very first property I purchased, that duplex, there was a lot of uncertainty, anxiety, around that. I think most people will be a little concerned, apprehensive when they’re buying their first real estate investment. It’s big. It always feels like a big thing when you do it the first time. After you do it the first time it doesn’t feel like a big thing. I would say though, for someone who is doing it, you said for someone the first time, I would say working with people that know how to do it really well takes a lot of the fear, concern, out of it. That would be my number one [inaudible 00:27:51].
Mercedes: Awesome. What would you say was your biggest challenge that you had to overcome during this whole process?
Tim: Filling out a bunch of mortgage paperwork.
Mercedes: I understand.
Tim: To work?
Mercedes: I understand. But I feel[inaudible 00:28:06] we try to negate that a little bit and we try to do everything all at one time so you wouldn’t have to go out and do it multiple times.
Mercedes: Do we not?
Tim: Yeah. I don’t have, talking about it, we didn’t talk about this but one of the things we did was that first batch of seven, we did all the loans in my name and then the batch of five we did them all in my wife Laura’s name. So that, we’re only using up one of those Fannie Mae spots. For your listeners that might not be aware, there’s a limit of that really cheap debt, 10 per person. And so, we were strategic about that. And I’m only half joking, there’s a lot paperwork associated with mortgage, mortgage stuff using one mortgage broker for all of it that helps a lot.
Tim: A lot compliance and paperwork, that’s just, that’s part of the process.
Mercedes: Yeah. Somebody asked me, “How documents are in one closing?” And it kind of, the average is about 150 pieces of paper. Now you don’t need your signature on 150 times, but each property is a stack of paper. Now it’s all electronic so, the process is a little easier. But the closing, literally we still have to send a closing agent to your home or office and I do know they have fill, or they have to have you sign, the bulk in actual blue ink. So, we try to make it as easy as possible and we try to send one notary at one time to do all seven. And I think we accomplished it with two runs maybe. But, yeah you’re right it’s a lot of paperwork, a lot of signing and there’s a reason for it. So, congratulations that you got over that hump.
Awesome. So, what would you say that now that you’ve gone through the process twice? We strategically planned that you purchased certain properties, your wife purchases other, so you guys still have more buying power left in your portfolios, if you will. What would you say you would do different? If anything, because you may not want to do anything different.
Tim: I think where we are right now, actually, it’s related to the thing I was thinking about the loans. The only thing a little bit different would be trying to optimize for the larger properties, a little bit larger, in order to, I’ll say kind of get the most use out of those cheap 10 loans. So we had talked about, we saw a range of properties that we looked at, I feel good about it and now we’re also thinking about, okay what next. Because now we’ve used up nine of my 10 loans total and six for Laura, plus everything we have. And so, that’s the only little thing.
Mercedes: Got it. Got it. So you wish you would have purchased bigger properties with your first four slots than what you have purchased now?
Tim: I wouldn’t … Actually, it’s too strong to say I would have done that differently. That’s just what I’m thinking about for us to come in the future. What I might do differently compared to the previous ones.
Mercedes: Got it.
Tim: What we’ve got now, really good. I’m very happy with. Very happy, good numbers and now I’m just looking at those loan slots, we’re almost running out of them. So, we’ll probably get, try to stretch them as far as possible.
Mercedes: Trust me I have a plan for the next step for you, Tim. That’s a whole different podcast because it talks about converting your personal loans into portfolio ones. But we only talk about that when you get to your 10 because it’s a whole different conversation. But there is a strategy, Tim, because I’ve done it with Matt so, when we get there, or like Matt says, “Travel as far as you can see and when we get there we’ll see further.”
Tim: All right. I like that.
Mercedes: Yeah, yeah, yeah. So, tell me about, some would argue, oh my goodness, you guys have 12 properties, you’re in three different markets, that’s a nightmare. You have three different property managers. What’s that experience like for you? Tell me about the property management experience and collecting your rents cause they come between the 15th and the 20th of each month. So, tell me about that.
Tim: Yeah, it’s definitely not a nightmare. It’s really easy. So, all three of these property management companies are well established, very professional, they have standard processes. Up front, there’s some paperwork to fill out, set up accounts, stuff like that. And then they all have their web-based portals and literally what happens every month is they will transfer the funds that came from the rental income directly into our account. Online they have all the reports and things like that associated with what’s happened. It’s really straightforward. Like you would expect from pretty much any property management company there are basic rules about, if there’s a possible expense over a certain threshold we’ll contact the owner to get approval, that type of thing. So, that happens when it happens. But it’s pretty smooth. It’s not a nightmare.
Mercedes: I love it. I love it. So, when a property manager contacts you, you’ve been doing this for a little bit over a year. How many times have you been contacted by property management because there’s a devastating issue happening?
Tim: There hasn’t been anything devastating.
Mercedes: Awesome. That’s good to hear. Awesome.
Tim: I’ve read enough books, listened to enough interviews to know there are horror stories out there. I think we’ve only been contacted maybe three or four times for approval of expenses or maybe to sign something, some paperwork or something.
Mercedes: Yeah. Yeah.
Mercedes: I love that, that’s good to hear. So, your property management take care of you.
Tim: Yeah. They’re all really good.
Mercedes: You know Tim, I say this often, I probably say it every week because I get kudos for our team. Matt and I have spent years, not only finding our teams and creating them, but perfecting them so that they understand our typical investor, our client, which you’re the typical model of our client. You’re a busy professional, you have your own family and you just want cash flow. And so, we drill it into our property managers, you have to take care of these investors and I get praise for them all the time and it makes me so happy because it’s taken me so long. Matt and I share often, the hardest part of our job is creating our teams on the ground. Truly it’s the hardest part and so when you tell me you’re in three different markets, handled by three different property managers and they take care of you it’s like music to my ears. So, thank you for sharing.
Tim: Happy to-
Mercedes: Awesome. So, what advice you give, Tim that new investor, maybe not necessarily the one looking to do a 1031 exchange, but just a new investor thinking about turnkey or thinking about cash flowing properties. What would you tell them?
Tim: Yeah. I think, well actually two things, one is, I didn’t invent this I think I probably heard this probably from reading a book or maybe a podcast on real estate guys. I might not get this exactly right but, this kind of order of, first know why, what you’re trying to achieve is the first step, then market, then team, then property. And that why would be, like in my case for example I gave, cash flow so my wife Laura could stop working. Someone trying to build equity for net worth that might give them different approaches. That’s really important.
The other thing is, especially if you’re new, it would be to work with folks that are experienced and really qualified and working with new people helping them get through the process. So, I’m big fan, at least not from this experience, I’m a big fan of turnkey just in general, that concept because it can take a lot of that uncertainty out and get someone, help people get through that process.
Mercedes: Yeah. Awesome. At the end day Tim, you said, “I was interviewing four or five different turnkey properties and I ended up with you.” I’m honored and I’m humbled. What was the one thing out of the other companies that you were interviewing, wow, I need to work with Cash Flow Savvy? What was that tipping point?
Tim: It wasn’t one thing. It was a few things.
Mercedes: Yay! Do you mind sharing?
Tim: Yeah. One of the things was, first of all, I’ve got a really great feeling talking to you. You were highly recommended, that goes a really long way. I mean this being a really important decision. But even with there were some other qualified, reputable ones. There was a couple of things. One was that of your seamless access to really good cash flowing market. There are other turnkey providers that are kind of anchor to one market. That’s where they do their business, whether that market is good or bad type of thing.
Tim: That was one thing and then you walked through the process it was crystal clear to me and I could very easily understand how it would play out. And for me [inaudible 00:37:36] it was tied to the 1031 exchange. I wanted to have high confidence this process would run through smoothly. I got the best feeling of confidence after you and I had spoken.
Mercedes: Awesome. Awesome. Thank you so much for the kind words and really Tim thank you for spending this much time with us. I know you are a busy man, you’re an entrepreneur, you’ve got your own team to run. Plus you have 12 investment properties that are cash flowing. So, thank you so much for your time, for your knowledge and really for just sharing so openly. I know that there’s someone out there listening that said, hey, if Tim can do it, I can do it too. So, that’s awesome. Tim, thank you so much.
For our audience listening, thank you for tuning in. I truly hope that Tim and Laura’s story inspired you in some shape, way or form. Laura now gets to be a stay-at-home mom which was their goal to begin with and that is just music to my ears. Whenever you’re ready feel free to go to cashflowsavvy.com, that’s savvy with two v’s. Download your frustrated investors guide to passive income or book a call with me. I am truly a phone call away and I’m happy to speak with you and see how I can help you quit your job too. This is Mercedes Torres with Cash Flow Savvy brought to you from Theriault Media and Epic Real Estate. See you next week. Tim, thanks so much.
Tim: Thank you, Mercedes.
Speaker 1: Your portfolio has seen better days. But this too shall pass. And the best for you is yet to come. Together we’ll get you there faster. We’re Cash Flow Savvy and we’d like to share some information with you that will show you how you can take control of your financial future and accelerate its arrival. Go to cashflowsavvy.com. More building, less waiting. Cashflowsavvy.com.