Tyler is the founder of Jump In Real Estate, a website about achieving financial independence and smart investing strategies. He invests in out-of-state properties, has the major travel bug, dreams of living #VanLife, and funds his adventures through real estate!
[0:01] Intro: Hey everyone, and welcome to another episode of Crushing Real Estate with Bryan Pham, where we interview real estate professionals around the industry. If you enjoy this episode, please subscribe to the show and leave a very positive review. We released an episode every single Sunday, so stay tuned. Enjoy.
[0:19] Bryan: Hey guys, welcome to Episode One of Crushing Real Estate, it is a great day I get to interview my friend Tyler. Hey, Tyler, can you, walkthrough why you are and give us a little bit of info on what you do in real estate?
[0:33] Tyler: Yeah, Bryan, thank you very much for having me on today. It’s kind of cool that we’re talking over this podcast, I kind of met you not too long ago through a mutual friend of ours Jimmy 00:43 [inaudible], shout out to Jimmy. I think this will be a theme down the line but in terms of just meeting people and networking, you never know where a friend or connection could come in handy and really introduce, you know, friends basically. So, a quick little note on myself, I grew up in the Bay Area, born and raised out here in Berkeley, California, went to school down south, so kind of the, which is actually where I met Jimmy, so in Riverside, but I started investing real estate in 2016, decide to go for that cash flow that everyone wants, that passive income, definitely fell into some ups and downs in my journey. But I’m really excited to kind of talk about my strategies and my learnings and my failures.
[1:29] Bryan: Definitely, I’ll get started real, quick. How did you get started into real estate and where did you buy your first property?
[1:36] Tyler: Yeah, so I started getting into it in 2016 like I mentioned, that was kind of a moment in my life where I really wanted to step up my knowledge base and my knowledge of investing and financial kind of intelligence. I wasn’t making a ton of money back then and that was kind of the real driver of that, basically through podcasts, through books, again, I was really in that tough spot of not wanting to work for the rest of my life, quote unquote, we’ll call it, I didn’t want to work till I was 65 years old. And so, that was a huge driver. On top of that, you know, I saw myself sitting down every month and writing that rent check to my landlord who’s sitting back and just collecting this rent money, this is a pretty good business model here, provide a place to live to someone, collect rent, if you can cover your expenses and cash a little bit, like this is a solid model that you can scale then bringing that income to really support your lifestyle. So, on top of that, I have a brain that’s always working, and I have these kind of random ideas but I also had the dream of living the, what they call that, the van life, we’ll call it. I don’t know if you knew that about me, Bryan, but–
[2:55] Bryan: I didn’t know that about you, Tyler.
[2:57] Tyler: At one point my life and maybe still in the future, I do want to try out living in a van which one of my friends is actually doing right now but, what that required was, finding ways to bring in consistent monthly income, as well as limiting my expenses. And I also thought, you know, hey, the best way to do that right now in my life is to get into the real estate game where I could cash flow monthly income, support myself monthly and live out of that van
[3:24] Bryan: Sounds like a crazy idea, but well suited for the Bay Area.
[3:28] Tyler: That got me started, man, it got me started.
[3:31] Bryan: So, can we jump into your first deal? Can you walk us through, where’d you buy it? If you don’t mind sharing some numbers, what was going through your mind in your first deal?
[3:41] Tyler: Yeah, so the first deal was in Indianapolis, Indiana. So, I decided to invest out of state over 2000 miles away from my hometown in the Bay Area. And I’ll admit, I was very naive going into that. You know–
[3:53] Bryan: Why did you think Indiana of all places?
[3:57] Tyler: Well, without getting into too much detail, it was a market. Well, I guess I’ll rewind it, I worked with a turnkey company, I’m not a fan of anymore, but so I kind of by default, ran and fell into that market. Now, a couple years later, I am really understanding that that actually is a pretty good market for cash land properties. You’re seeing a lot of population growth in that area; you’re seeing job growth at higher wages in that area. The biggest example that I keep touching on is Salesforce moved out there a few years ago, and it’s the second largest headquarters in the US right now. And so, with that, you also have the basic metrics of the acquisition price to rent ratio, like the numbers make sense, you can find a property out there that will bring in more money than your monthly expenses. And that’s the basics of a cash flow property so that all exists out there. So, that’s kind of why I got into that market, kind of by default, fell into it, but I’m now finally understanding that there is a power and a really good future for that Midwest market. And yeah like I said that was through turnkey company, again I hit a lot of bumps and bruises along the way there.
[5:08] Bryan: How did you find this turnkey property? Did you go on meet ups or did you research?
[5:14] Tyler: Like again, I was super naive in that first property, I literally found it, I got hit with a targeted Facebook ad.
[5:23] Bryan: Oh, wow, it works. That’s great.
[5:25] Tyler: It worked man. Like I was somewhat stupid in that regard, like I felt for the numbers on paper, which we might get into later. Like the numbers on paper don’t always pan out as we probably both know. But yeah, I got hit with a targeted ad and kind of my mentality for this investing type of journey I’ve been on was I just jumped in, like, I didn’t have a lot of the knowledge that I do now. I mean, I remember that first property. I barely knew how to even calculate cap rate or even the cash on cash return, I just saw the numbers on paper, I said okay.
[6:04] Bryan: Wow, that’s pretty–
[6:06] Tyler: It was $37,000, rents for 750 a month, like the numbers on paper make sense, this is like a 10 or 13% cash on cash so I jumped in and made the leap, like I said again, hit some bruises, lots of pitfalls there but I learned along the way.
[6:26] Bryan: Yeah, did you finance this deal, or did you buy all cash?
[6:29] Tyler: This first deal was all cash, in my reasoning behind that was I thought I’d be a little less risky and not having to worry about a potential vacancy and having to pay a mortgage payment. I think in hindsight now I definitely finance and leverage for not having to put up as much cash as I need for all cash purchase. But yeah, that first deal again, I think I kind of did things backwards. You know, I decided to buy a property in the middle of nowhere, Indiana, all cash and to see it until later.
[7:04] Bryan: Oh, wow, we’ll dive deeper into that a little bit later. But, you know, we want to talk a little bit more about what keeps you motivated, Tyler, what keeps you going every day? What is your why, what do you, you know, I know you mentioned earlier that, you know, your why is to live in your van but, what’s the reason for that?
[7:24] Tyler: That was a former why but it’s kind of attached and I think what motivates me every day and that’s a really good question because, you know, you probably see people in your circle or maybe not your circle but around town and some former friends and they’re trying to search for that motivation and they’re not really happy with their job, but they don’t really have that why and how they’re going to get there. So, for me, the motivation is, you know, that lockdown vision and those goals and everything I’m doing today and tomorrow and the next day and the next month, like I’m going to be working on those goals and that’s really what’s motivated me and this is going to sound cliché and you’re probably going to hear this 20 times while you have this podcast, it’s all about the financial freedom man. And I hate to use that word because again, it can be seen as somewhat of a cop out answer, but I don’t, it’s also a selfish answer to you, right?
[8:16] Bryan: No, it’s not.
[8:18] Tyler: No, it is, it really is because you’re doing things for yourself. The thought is hopefully when I reach financial independence, and I can cover my expenses, I don’t have to, you know, clock into a job every day, which then hopefully translates to me being able to give back more to the community, spend more time with friends and family, you know, build those relationships which is, I think, what life is all about, like, if you have relationships, I mean, life would be completely different, obviously. That’s kind of the point of life, I think, without getting too in depth of what the meaning of life is.
[8:52] Bryan: Yeah, honestly, I don’t think that’s selfish, I think that’s a really good reason. There’s one of my philosophy is if you can take care of yourself first, you can make a bigger difference in the world.
[9:02] Tyler: That’s 100% true. And I think I learned that you know, within the past year myself too, it’s okay to be selfish because like you just said right now you got to take care of yourself before others, so we’ll leave it at that.
[9:17] Bryan: Yeah, we’ll leave it at that. I mean, you know, you got to real estate, your first deal, I mean, can you talk a little bit more about your second and third deal and what you want to get into in the future now or next five years, like where do you see yourself and you know, just start at the beginning like?
[9:35] Tyler: Yeah, so I bought that, I keep referencing that first deal, but that was kind of what got me started obviously, and probably the most important deal of my life so far. Because it got me into that right mindset and mind frame and got me into the industry basically, but I learned a lot from that first property and I bought a second single family home, probably about, you know, actually, it was about, it was almost a year later. So, I sat on that first property for about a year, really and it actually cash flowed, I ended up selling that but what I learned from that first property was the importance of buying in the right neighborhood, the importance of having a trusted team on the ground is where that property fell apart was the mistrust in the people I was working with. I had to learn that pretty quickly
[10:21] Bryan: What was the mistrust, was it the property management?
[10:26] Tyler: I’ll go into the quick story here. I think people will kind of know this already but, so about 11 months into me owning that property, I got a message from my friend Bocam, shout out to Bow down in LA. He drove by my property, he was in the area looking for properties, he drove through Indianapolis he goes hey, Tyler, like there’s a lockbox in your front door. And I’m like, no, you’re joking with me man, there’s no way, there’s a lockbox on my front door, like why? I’m like no, man there really is a lockbox on your front door. And so, it turns out long story short, my property was vacant, the tenants left without even, anyone know, however, my property management company did know, but they failed to notify me. So–
[11:07] Bryan: How long was this time period?
[11:09] Tyler: Well, within my understanding that the property was vacant and me firing them, probably two to three weeks because what I did is I took action real quick and I hired a third party property management company to go scout out the property, basically, I said, hey, we got to make some changes here. Like can you take a look, verify that the property is actually vacant? And sure enough, there was a lockbox on the front door and there’s even signs of a squatter in the garage, somebody’s broken the lock, and there was like, you know, a backpack and a bike and stuff in there. But yeah, so I mean, back to the main question, it was, you know, through that experience, I understood the importance of neighborhood class and the class that you draw in a good team on the ground, you know, higher rents obviously are going to protect you better for future expenses or repairs, because even in that case, I ended up with a quote of $16,000 to get that property back up and running. I bought it for 37 and there were 16K in repairs, which I decided not to spend on or reinvest in because I knew that I want to get to better class neighborhood, higher rents, better school district, less crime, and then I was working with a better team. So, that’s kind of what the progression was and then after that, I decided to, we’ll call it quote unquote, scale up and that’s when I went from single families to a massive duplex. I went from single family duplex, I’m like, okay, I’m a real estate investor, I know what I’m doing here, let’s go from one unit to two, which is, you know, a good example, I was still pretty young and still am young in this game, but I picked up a duplex, actually on my birthday last year, closed on my birthday in July and then I started to think even bigger and like think about larger multifamily, which I think Bryan, you’re kind of aware of now. I decided to dive into the syndication world and I’m not a general partner by any means or anything like that but my thought was to get into some of these deals as a limited partner, you know, bring my cash and leverage these sponsor groups and leverage their experience and their knowledge and their knowledge of managing a deal, finding a deal, financing a deal, all that kind of stuff and to kind of get into that crowd really, learn the terminology, understand the business models and that’s kind of where I’m at right now, is I’ve joined a couple syndication deals in Louisville, and now recently Phoenix–
[13:44] Bryan: 13:44 [inaudible].
[13:46] Tyler: Sorry, what was that?
[13:47] Bryan: You’re doing two syndication projects right now?
[13:49] Tyler: Yeah, yeah. Again, just as a limited partner, I’m now in two deals. I just, we’ve closed on the Phoenix one end of June and then, you know, next steps for me are I’m trying to work my way into a general partner role for the next deal.
[14:06] Bryan: Okay, that’s nice approach, man. Is that where you see yourself doing now and in five years from now as a syndicator?
[14:14] Tyler: So, I’m not positive that I want to see myself as a, you know, a syndicator or call it, I think, because right now, I’m not really 100% sure if I want to do like real estate full time, I think, syndicating definitely takes up a lot of resources and time and I still have a W2 job, I still have other passion projects on my plate. And that’s actually one thing I’m struggling with right now is how do I allocate my time and my resources? And so, at this point, you know, in the next couple of years, I don’t see myself being a sole syndicator, I think, definitely provide value in a syndication deal, whether that’s working with investors or trying to raise capital or just doing due diligence. So, I think that’s kind of my next step right now. It’s a pleasure to be a general partner in a deal, yes, but not be like, again because I think there’s a lot of power to me right now having a W2 job and, and I do, you know, that’s going to take 40 plus hours a week from me away from real estate as an example.
[15:17] Bryan: Okay, I mean to those who don’t know what real estate syndication is, Tyler, can you give a brief description of what syndication is?
[15:23] Tyler: Yeah, I would say the summarize like, macro level version, or summary of a of a syndication is basically it’s pulling together money, I’m sorry, we’re rewind. It’s multiple investors pulling money together to acquire a large property. Generally there is two sides to that, there’s the general partnership, which is usually the people that are, you know, finding the deal, they’re able to, they have the relationship with the brokers, they have a relationship with the finances, they know how to run due diligence. They know how to manage their property; they should know how to manage a construction site and renovations. And then the other side is a limited partnership where I just equate that to basically a silent partner, a silent money partner. So, the silent LLP, as we call them, limited partners, they come in with the money and it’s a perfect example of partnership and leveraging each other’s strengths. So, you have one side that knows how to find the deal and do everything to run it. You got the other side that just brings in the cash and you put that together and you got a great deal, hopefully, fingers crossed.
[16:28] Bryan: Yeah, that’s a really good definition, man, appreciate that. I guess now’s a great time to kind of circle back a little bit and talk about your lessons learned, what would you have done differently in your first deal now?
[16:40] Tyler: Yeah, I think I have, I think a good mindset in that, anything that goes wrong in my life or my investing career or my job like, is a great mentality to have and I think you always need to find the positives in every negative. And so, you know, if you have that mentality, you’re going to see every negative as a positive and you’re just going to be more optimistic in everything. Yeah, exactly. And that, having gone through that first deal again of, you know, buying this property out of state, not very knowledgeable, working with people that, you know, could be seen as untrustworthy or even shady into some regards, that would, you know, turn some people away from real estate but I think at least my mindset was okay, let’s take every single learning moment from that experience and moving on to the next deal, which helped me a lot in acquiring that next property in the next duplex. But I touched on this earlier, a lot of the learnings for me were just understanding how to analyze a property, number one, like understand your numbers, make sure you have the correct spreadsheets and if you don’t partner with someone that knows how to run those numbers for you, understand the the value and importance of location. Some people yes make money in those D class war zones. That’s not me and I don’t want to manage that. I’m leaning more towards that C plus B neighborhood man, like, well, you know, you and I were still pretty in this game. But I think it’s pretty easy to understand that those C and D class neighborhoods, they just draw a different type of tenant, a tenant who may not pay on time, a tenant who may not be able to pay period. And you also understand, like turnover and vacancy is what kills cash flow and return. And I think the last two things we’ll touch on is again, making sure you properly vet your partners and you really know who you’re working with. And then to expound on that is like, just keep actively networking with people and meeting quality people like yourself, Bryan. It’s just like, that has been the key to my investing career, is the only reason why I’ve been able to get into these bigger deals now is because I’ve been networking. I’ve been able to identify the people that are driven and motivated to succeed in this industry. They know, I was going to swear right there, but they know their stuff and they know what a good deal is and what a bad deal is, they know how to run the numbers and if not, you just partner with people that kind of pick up your weaknesses.
[19:09] Bryan: Yeah. I mean, you always want to partner with someone who complements you, you know, you’re really good at analyzing deals, find someone that’s really, really aggressive or vice versa. You know, like, that’s a part of, I always tell my friends, like, when you enter into a partnership, it almost feels like you’re dating them for a lot.
[19:29] Tyler: Yeah man, it’s a relationship.
[19:31] Bryan: It is.
[19:32] Tyler: And, the hard thing is like, I think a lot of, I’ll say this, like, I kind of came into this with more of that siloed approach where I wanted to do everything myself, and that was probably because I was the only child for a while until my sister came along like 12 years later. But yeah, so I’ve always been kind of stubborn in wanting to do things myself. But if you can find that person that complements yourself and picks up where you kind of lack or whatever that may be, that’s where you’re really going to grow exponentially. And that’s the other thing, like you don’t, you know, if you can do something yourself, that’s great but if you can find a partner and exponentially grow , that’s what the partnership is known for.
[20:13] Bryan: I know that most people are afraid of partnerships, especially those who meet at meetups, when they really don’t know that well, I mean, do you have any suggestions for how you should vet them and how you should protect yourself as a partner working with someone else that you barely know?
[20:29] Tyler: I guess I would say, like, when I talk about actively and like, aggressively networking, I don’t want it to come across as like every person I meet, it’s like an interview, like, hey, I’m Tyler, how are you today? That’s the thing, like, you want to make friends. That’s actually what I mean, it’s not networking, it’s like making friends and I heard that on some other podcast or your pockets, probably like, it shouldn’t be a job interview like that, just going to come across superficial and you’re not going to really form that bond. Like, you got to find people with that same mindset and become with them because that’s going to be successful. So, don’t go into every like meetup and just like shake everyone’s hand and pass out a business card and think that you’re going to get like 20 deal’s off market the next day like, yeah, find those people that you that are going to be like, actually, friends.
[21:25] Bryan: It’s a networking game?
[21:26] Tyler: Yeah, I think that’s probably the best way to network is just going with the approach of, you know, don’t get as many, you know, business cards as possible. But like, find those few key people that you think can actually, you can work with down the line and actually, like, go out and grab a beer with sometimes or go out and grab some lunch and like, just have open conversations with these people about life and career and literally everything like Bryan, I’ll sit down with you and we don’t have to talk about real estate, like we can talk about anything you want. And I’m sure I’ll have some comments about that and vice versa but it’s going to be a good time.
[21:59] Bryan: Yeah, I mean, I feel you in that, I mean real estate’s a very relationship time game and you never know who you’re going to meet and what kind of value you can bring that person. But, you know, be stepped into the other side, I mean, when you enter into a partnership, there’s also operating agreements where you could, you know, protect yourself or spell scenarios, or completely unforeseen, any guys partnering up in the future, I highly recommend looking to operating agreement. I think no matter how strong your friendship is, or what you think that a person will or will not do to you, it’s always great to have an operating agreement, especially one in rental investing. There’s no end date, it’s not like flipping, is, you never know when you’re going to sell so definitely be careful.
[22:50] Tyler: And to touch on that really quickly because I just read a book recently called the hundred dollar startup and they actually, it’s a great, it’s not really real estate related, but it’s a pretty good book and that they kind of go over how to start a business. And part of that covers partnerships and part of that covers, literally, like a one-page partnership agreement in that book. So, take a look at that. It’s a great resource. And to your point, Bryan, like me and my friend, Nick, we’re looking at doing like an e commerce site and as partners and the first thing I think we really understood was, you know, partnerships can turn ugly, I think we’ve all seen that. And so, the best way to avoid that is like, let’s talk through equity, let’s talk through responsibilities up front right now. Because let’s say, you know, this partnership is flourishing, and our business is flourishing. Well, you don’t want to talk about equity like two weeks, or I’m sorry, two years down the line because that could be kind of a sticky situation. You’re going to start talking about, you know, you did this, you work 40 hours a week and I only work 15 and just like you said, knock out those details up front before you really start building out that business or that partnership or that deal, like get everything on paper
[24:01] Bryan: Yeah, I definitely agree with that one, be as clear as possible up front. I mean, a lot of my listeners are, they want to get into real estate, and I know like, we kind of just jumped in, right into your first deal. Can we talk about how you found your real estate agent, how’d you find your property manager? What kind of questions you ask them?
[24:19] Tyler: Yeah, so I’ll have to plug bigger pockets here. You know, the amazing resource online and that’s a great networking tool. It’s almost like, a social media platform for real estate investors. So, you know, it’s being active in the forums, asking questions, seeing who the best property managers and agents are out in your market and just connecting with them, like hop on the phone, people are still afraid to hop on the phone these days and to expect this, you know, super detailed response and they they’re going to hope that that’s sparked a strong partnership, but yeah, hop on the phone, make sure you do your research on realtors in the area. And the biggest thing for me was you know, I was investing in the Midwest and still am but I flew out there and I shook their hands and I met them in person, like a lot of these people that are investing from afar, they still think it’s super easy to just do it everything on the computer, which you know, technology has provided that opportunity for us but there is still a strong, I’m not sure what the word is I’m looking for there. There’s still, there’s a lot of value. Yeah, hopping on a flight, going out to your market, meeting people in person, shaking their hands and having a conversation with them. And so, they know–. Yeah, like I’ve flown out to Indianapolis, I make it a habit, I fly out there once a year, I’ve been there three times now, I’ve seen the Property Manager in person three times now, I’ve shaken their hands. But before that initial like hey, you’re hired type of thing, again, hop on the phone. I mean, I have 20 questions, I would ask them, for example, like a property manager, number one, like how many units do you oversee right now? How do you plan to market your units? That’s a big one. What’s your maintenance team like? And how responsive are they? How do tenants request maintenance requests, because, again, they can see in turnovers such a huge killer to your ROI? You want to make sure that that tenant is happy and there’s a leaky faucet, they got to be able to hop online and request a repair, you know, submit a repair request, right then and there to get that service. Otherwise, they might say, hey, lease is over, I’m out guys, sorry. And then understand, like kind of what the software they’re using is and for example, you know, I made a log into a portal online and see, you know, when rent comes in and what maintenance issues are popping up and if I owe any money, so some of those are the basic questions, but at the end of the day, you got to find someone that you trust to get along with and talk to easily and especially being out of state, communication is my main priority. Like if I email someone in the Midwest, I want a response within 24 hours, that’s a big thing for me.
[27:12] Bryan: Okay, wow, that’s some really, really good tips. That kind of brings us towards the end of the show and before we close out, Tyler, what’s your favorite book man?
[27:24] Tyler: So, I don’t have a favorite book, but I did want to mention a book that’s not related to real estate at all that I read earlier this year. It’s kind of a funny book is called Living with a seal. Have you heard that one, Bryan?
[27:36] Bryan: Not yet, but I’ll make sure I’ll mark it down.
[27:40] Tyler: It came out and I’m sure how long ago but it’s by Jesse Itzler and he, it’s almost like a diary of when he live with David Goggins who is this honestly kind of insane like workout freak but it’s a diary of him living with a navy seal. So, it’s not like the actual animal, which I think a lot of people think of right away. But so, it’s a diary of him living with this Navy seal for one month. And the reason why it was so powerful to me is because the major theme is all about doing things you don’t want to do because that’s what’s going to make you successful in life. Right? There’s a kind of a hilarious chapter where, you know, this Navy seal is making Jesse workout every day, at the craziest hours of the day, non-stop. And, he’s like, hey, Jesse, let’s go for a run. He’s like, okay, Jesse’s, like, let’s go for a run. And they get to this, this is out in the East Coast. They get to this like ice lake and David Goggins, the Navy seal says jump in the ice lake and Jesse’s like, hell no, man, I’m not jumping. He makes him jump in the ice lake and that, again, the theme is like, no one wants to jump in the ice lake, there’s no benefit to jumping in the ice lake, you can literally freeze and die in the ice lake. But it’s all about just saying, screw it, let’s get through this, let’s push through, push through this challenge. I don’t want to do it but I’m going to tackle it, this is going to better me in the long run. So, I mean, you see that day to day, it’s discipline and getting through those things that people don’t want to get through, a lot of us in America when they get home, they want to sit on the couch and watch Netflix, right? No one wants to come home and work more. But I know you and I, Bryan, we do get home and we do the things that we don’t want to do so we can have a life that you know, more successful. We’re doing things that most people don’t want to do, what it come down to so that’s why I like that book so much, it really reinforced that theme.
[29:38] Bryan: I definitely have to pick up this book soon, man.
[29:41] Tyler: Living with a seal.
[29:42] Bryan: I like that. So, Tyler, how can we reach out to you, via Instagram?
[29:47] Tyler: Yeah, so I, about a year ago I started a blog called jumpingrealestate.com. I basically started detailing my deals from start to finish and I had some traction on bigger pockets and was able to kind of bring an audience online to my own blog. So, jumping real estate. com you can see all my social handles and I do blog posts on real estate investing and kind of profile my career and my journey. And then also the biggest thing is just to provide value to the reader. So, I make sure that, you know, everything I write has some value to the reader.
[30:22] Bryan: Okay, great Tyler. I appreciate your time. This is a great interview.