[RWS #748] Real Estate Investing: 21 Properties in 1 Year as a Nurse

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Real Estate Investing: 21 Properties in 1 Year as a Nurse, Real Wealth Show Podcast Episode #748

Today’s guest has worked quickly to build a portfolio of single-family rentals. She works a full-time job as a nurse, and bought 21 homes in less than a year. But she isn’t just motivated by the thought of a secure future for herself. She is specializing in Section 8 homes that house single moms and their kids to be sure they have safe and affordable housing. She is also a former Dale Carnegie instructor, a group leader for InvestHER of South Florida, a member of RealWealth and Bigger Pockets, and is mom to two millennial entrepreneurs. I’m delighted to have Rita Medeiros on our show today to tell us more about what she’s doing with real estate and how that’s helping her and those around her.

Kathy Fettke: Rita, welcome to the Real Wealth Show.

Rita: Great, so excited to be here.

Kathy: So glad. All right, so what inspired you to invest in real estate?

From a Good Life to a Great Life

Rita: Well, my grandparents owned a duplex. Unfortunately for me, I was not intuitive enough to join into that when I was about 18 years old. I bought into the theory that we’re all sold and that is go to college, get a good job, have a good life. I feel as though I let a good life get in the way of having a great life. It wasn’t until many years later that I– We all know about real estate. We know it’s a good idea, whatnot. But it wasn’t until many, many years later that I thought, you know, let me go and check out that real estate world. That was about a year and a half ago.

Kathy: Oh, okay. Why do you say it was a good life but could have been a great? What would have been different if you started earlier?

Rita: I would have had passive income, I believe from an early age. I would’ve had many years to have that appreciation grow, and all of that. It wasn’t until later on that I really came to the realization and it came to me one day when I started thinking about my future. I made that fateful call to the social security office to ask them, gee, down the road when I do retire, what will be my monthly income after paying in for most of my life.

They gave me the sobering number of about $2,000 a month. I thought, no, I cannot live on that. That was the day I jumped into real estate with both feet and have not looked back about a year and a half ago.

Best Time to Invest in Real Estate

Kathy: Oh, that’s wonderful. Knowing what you know today, do you think you could have started earlier, just starting out in your career? How would you have gotten into real estate before you maybe technically had any money to invest?

Rita: Yes, I think nowadays there are so many other avenues. We see many people getting in at age 18 or 20 before they go to college, you know, through flipping or wholesaling or Vrbo. There’s just so many different real estate avenues that I think in retrospect I would have jumped in, perhaps not to the level I have currently, but I would have become proficient, learned about it. I just wish I had started earlier and that would be my message to any of the listeners out there today.

I think the best time to invest in real estate probably was 20 or 30 years ago. However, I think the next best time is today. I would strongly encourage everyone to just jump in today.

Kathy: Yes. It’s really not necessarily a get-rich-quick scheme, right? It’s over time, real estate seems to outperform everything else. Especially like you said, if we started 20, 30 years ago, that would’ve been amazing. Or if your parents started for you. Like, my mom, we often joke how she grew up and she raised us in Menlo Park when houses were $50,000.

At the time, she thought, boy, I should buy one of these for each of my five kids. But it just wasn’t a mindset back then, although she thought it was a good idea. Well, those homes are worth millions now. Yes, if your parents think about it, what a great way to pass on an asset to your children. Again, if you jumped in a year and a half ago, why? What triggered it for you?

The Real Estate Trigger

Rita: What triggered it was just looking at social security down the road and realizing I am tired of punching in. My day job is that of a nurse and I’ve done a time clock and you get paid for the hours you put in. I thought for down the road I really wanted something different and I wanted that passive income where I could just earn some money while I was sleeping, while I was at the beach. More importantly, I really wanted to build some legacy wealth as we just mentioned for our children. I didn’t want my children to have to work as hard as I have.

I thought if I put together several houses and kept it as a buy-and-hold model, that would be some legacy passive wealth for my children down the road.

Fast Track to Passive Income

Kathy: Awesome. It looks like you started a year and a half ago, but you did not take the slow path. You dove right in. How many properties do you own now?

Rita: I own 21 and yes, I did not take the slow path because I felt, Kathy, as though I needed to make up for lost time. I really jumped in with both feet. I burned all the bridges and really jumped in and I earned my master’s degree in real estate. Then I read 60 books my first year. I listened to over 330 podcasts my first year. We always go to college and we take so many courses that are not even applicable to our current jobs.

I looked at this as an investment in myself and I thought, let me just play catch-up and take as many of the courses and books as I could to be able to get well-versed and jump into this world of real estate.

Kathy: Oh, my gosh, that sounds like me. I did the same thing. I read every book I could get my hands on and just wanted to understand it inside and out. There’s so much to learn, but it’s fun to learn when you’re really discovering how to build wealth in ways that nobody’s ever really taught. How do you buy 21 homes in less than a year? How do you do that?

Rita: Well, I did it the hard way. I did it one at a time. Many people will buy a multifamily and have 25 or 50 doors under one roof. But I thought, no, let me do it the harder way. I decided to do the buy-and-hold model, and I elected to purchase single-family homes. I was doing probably about two a month for the first year and just dove in with both feet and put them on the board, and I worked hard to get them 100% rented. I’m happy to say they’re all rented today, so it was well worth it.

Cash Flow vs. Appreciation

Kathy: Where did you buy?

Rita: I live in South Florida and I’m an out-of-state investor in Ohio. I’m doing that pretty much for the cash flow and if I get appreciation on top of that, but South Florida market as California is probably now priced a little bit high. I really wanted to go for the cash flow. I looked in the Midwest.

Kathy: Okay. Where in Ohio specifically?

Rita: Cleveland.

Kathy: Cleveland. Oh, yes. I love Cleveland. Great city. Okay, so all of your portfolio is there?

Rita: Yes, I felt that it would make sense for me to learn the laws of one state as opposed to four or five different states. I also thought to be able to put my team together, I wanted to put one team together in terms of property manager and realtor and lender and all of that.

I liked the idea of keeping it somewhat consolidated into one state since it’s challenging enough as you well know to invest out-of-state. I didn’t want to spread myself too thin. Yes, all in one spot.

Finding the Right Property Manager

Kathy: Wow. You found a good property manager there that does the work for you or how did you–?

Rita: I am on my second property manager and what I did, Kathy, was I just googled all the property managers in the surrounding area. They were a list of 10. I interviewed them by phone, and then I narrowed it down to about three. Then I went back and I impersonated a future tenant to see exactly how they would treat my future tenants and then I narrowed it down to one. I think there’s information to be gleaned from a tenant’s perspective rather than just a landlord’s outlook.

Kathy: That’s brilliant. We did that once in Cleveland. We were doing a tour there and I had about 50 people on a bus and one was from Australia and said that they were in the process of buying an apartment in Cleveland and wondered if we could drive by it. We just turned the bus and went to see this property that a broker told her was in a really good part of town, near a college, fully rented. We drove by and yes, there was a college about a mile away, but way on the other side of the tracks. We looked at this building and thought, this sure doesn’t look like a fully-rented building.

We did exactly what you said. We called the property manager from the property management sign outside and we said, “Hey, we’re a group of people not from around here but there’s 30 of us and we all want to live here. Do you have any availability?” Of course, he said, “Yes, we’ve got room for all of you.”

Kathy: But it doesn’t sound fully leased to me. Anyway, calling and pretending you’re a tenant is a great idea. I love that.

Rita: Yes. You have to get creative to find the truth.

Financing 21 Rental Properties

Kathy: To find the truth, it’s really important. Wonderful. Okay, so let’s talk about down payments and financing. How did you come up with the down payments and the financing for 21 homes in one year?

Rita: I know, well, fortunately, the one advantage of starting a little later as opposed to when you’re 18, is that hopefully, you’ve accumulated some cash. I was a saver and I decided to cash out of the stock market. I had been in the stock market all my life. I decided that rather than the market, I wanted to put it in real estate. I cashed out of stock market. That was my seed money. As a single person, we can have 10 loans in our own personal name.

I also did that as a married person, we can have 20 loans before we have to look to a portfolio lender. I started with my own seed money, purchased them, then went back, refinanced out 10 of them to redeploy my cash and be able to do it again.

Kathy: So good. Congratulations. About what price point were these purchases?

Rita: They’re on the lower and they’re probably C-minus properties. I’d say under $50,000.

The Benefits of Section 8 Housing

Kathy: You went for C-minus. That takes courage. Tell me more about that. Have you had any issues with the management of this? We try to stay around C-plus, B-minus.

Rita: I have not had real issues because I use the Section 8 program. There have been many stereotypical ideas about the Section 8 program. Many people stay away from it because of some of the horror stories. What I’ve found Kathy is the exact opposite in that if a Section 8 tenant would damage our property, they then risk losing their Section 8 voucher for life. What I found is actually the opposite.

The moms that put their children in the local schools are very careful to take good care of the property because they don’t want to lose their voucher. They would like their children to continue in the school system. I’ve had really good luck with the usual landlord problems that you have. No horror stories. I’ve had a really good track record so far.

Kathy: Wonderful. With Section 8, they come every year to investigate the property, right, make sure it’s in good shape both from the landlord perspective and a tenant perspective.

Rita: They certainly do. Many people look at that as a negative. I look at it as a positive in that yes, Section 8 will come by annually to inspect the property, but I want my properties to be up to code and have every minor thing taken care of. I feel like since I’m not there with eyes on it, I know Section 8 will be coming in on an annual basis.

They give me a list of whatever minor things need to be updated. I have my contractor take care of that. Then the properties are up to code. I just view it as another crosscheck and I view it as a positive thing.

Kathy: That’s great. We just got a letter for our rental property in Cleveland and they do. They come and check and they make sure everything’s updated. There’s an expense there, but why would you not want your properties up to code? You’re (crosstalk) would expect that of you.

Rita: Exactly. That’s right.

Out-of-State Investing Made Easy

Kathy: Wonderful. Well, what are some of the things that you’ve learned in your, I want to say fairly short experience, but broad at the same time. I’m sure you’ve learned more than most people with 21 properties in one year or so.

What are the main lessons you’ve learned that maybe you would’ve done differently had you known?

Rita: Well, I’ve learned that it’s not an impossibility to put this together. I talked to so many people and they say, “Oh, my gosh, how did you do that out of state, far away?”

Really, if you jump in and do some research, we are investing in the best time of our lives in terms of having our iPhone at our fingertips. We can find so much helpful information in terms of crime rates, school systems, Google Earth.

We can utilize that tool to be able to purchase at a farther distance. It’s my feeling that we end up paying more for the convenience of driving by our properties. Once you can make that mindset of looking outside of your own neighborhood by using the tools that we have, then it wasn’t that difficult. I had to learn lessons in terms of how to put my team together.

That was challenging but I’m a pretty determined person. I thought, well, first I need a realtor. I called several realtors until I found one that was responsive to me. In that, I mean just listening to us, are they giving you the right listings, the appropriate price range, the market that you want to be in. Then it was great because I really find that rock stars lead us to other rock stars. I’d ask my realtor, “Who do you know that’s a property manager? Who do you know that’s a contractor? Who do you know that’s a lender?” The lender would lead me to a title company. A title company would lead me to an insurance agent.

In retrospect, it was not as difficult and leveraging other people. We always learn to leverage money and that’s great and as important. I also learned to leverage other people’s expertise that I perhaps did not have.

Kathy: I love that. That is exactly what I’ve done too, is learning from others and just like you said, getting referrals from people who are like you said, superstars.

They’re going to work with superstars as well. With that said, you still got to do your due diligence on everyone, do a quick Google search or background check. We do that anyway because even as someone who’s had a great track record, sometimes they can slip if they have personal issues going on or something. Always do your due diligence at least on the property at a minimum.

Rita: Good point, Kathy, because people’s personalities change. I’ve had contractors that are great for 10 properties. Then something happens and you could hardly get ahold of them. I do think you can never do enough due diligence, background checks, referrals, checking, especially long-distance.

Learn As Much as You Can, Then Dive In

Kathy: Absolutely. One of the things that you would recommend to any new investor is to do your homework, educate, educate, educate. What are some books that you recommend or ways that people should take action to learn more?

Rita: Well, I think there are so many websites around. Your website is such a wealth of information. It’s been so helpful and great. What you do for real estate investors out there is so beneficial. I would just say, you know, get as much education and there’s so much free education. I get sad when I hear people paying $50,000 to a guru or $30,000 or whatever it might be. One of my most helpful books was probably titled Long-Distance Investing by David Greene.

I wish I had had that when I started because really is a step-by-step if anyone’s interested in that long-distance process, I would suggest picking that up. Other than that, read as many books. Whenever there’s a podcast guest, they normally recommend a couple of books. I have a notebook and I write down all of them. That’s where I get my reading list from other real estate investors who recommend books.

The information is out there, the local REIAs are beneficial. Even if you’re investing as I do out of state, you can still garner information from the local investors because we all have similar challenges and problems.

2020 Real Estate Goals

Kathy: Great advice. I love it. What’s your goal? When do you hope to be able to retire or what are your plans for 2020 and beyond?

Rita: Well, my goal was to finish the year strong and I just purchased a property about two weeks ago in December. That was good for 2019. My number is more, that’s how many I would like to get. I don’t know if that’ll be 20 or 100, whatever that might be. I’m open to growth and that’s what I plan on doing. In terms of my retirement, fortunately, because I’m a nurse, I only work 12 days a month. Right now, I’m able to balance both and it’s nice to– My lenders love my W-2 income, so I’m trying to hang on to that. Many people get into real estate and say, “I want to stop working.”

I would just suggest that you look at your own personal financial information and try to hang on to that W-2 income, as long as you need it in terms of lending.

Kathy: That’s a very wise point. I hear that a lot too and I tell people, “No, don’t retire until you’ve maxed out all your loans. You won’t get any loans once you retire.”

Rita: Exactly.

Kathy: Totally.

Rita: True.

Kathy: I agree with you. How are you getting loans now?

Rita: Well, right now, I’m looking for a portfolio lender because that’ll probably be my next step to consolidate since I have maxed out my 10. That’ll be my next challenge and my next growing step.

Kathy: I’ve got some good referrals for you. A portfolio lender, for those of you new to that concept, would be not your Fannie, Freddie government-backed loans there. They’re independent and they might lend against the whole portfolio. Then you can freeze up for you to go back to the conventional route. We know there are so many good lenders out there now, so much money in lending. That could be a possibility.

Rita: You’re right, and money is so cheap right now. In 10 or 15 years, we may look back and wish that we had leveraged a little more.

Single-Family vs. Multi-Family

Kathy: Yes, at these low-interest rates. Now, there’s a big trend and fad right now to get into multifamily. I hear a lot of people running around bragging that they have this many doors and so forth. You later find out that they’ve just invested in someone else’s syndication, and they only own a tiny fraction of all those doors. What are your thoughts, why did you choose single-family over multi?

Rita: I like single-family because I thought where would I want to live? Would I want a house with a yard or would I want to live in a big brick structure that’s multifamily?

I went the route of where I would want to live and also my market. You have to look at what your market presents to you. Where I’m investing, the multifamily are in the rougher parts of town. I really wanted to stay in that C neighborhood and my single moms in the Section 8 program love my houses because they’re in neighborhoods, their children can go to safe schools, they have a yard, and I just thought I’m a bit of a contrarian. I thought if everyone’s going to multifamily perhaps, it’s a little bit overpriced at this juncture. I thought I could do them one-by-one and do the buy and hold model and just build it up a little slower but really have a strong asset underneath that will be there for my children.

Kathy: I know that you’re doing this for your retirement but I also hear an underlying pride in what you’re doing for other women. Am I right on that?

Investing with a Conscience

Rita: Yes, absolutely. The 21 moms I have in the houses I am so gratified to be able to provide that safe affordable housing for them. I hear them putting their kids in school and wanting to stay there. That’s the other thing about resident retention. I feel there’s more of a turnover in some of the multi-family product. If you get a solid house in a good neighborhood, many people flock to that just based on the school systems. I think there’s something to look at in that avenue.

Kathy: Yes. I look at it the same way not just this tenant is working for me but rather I’m working for them. I’m providing them a lifestyle that maybe they couldn’t have otherwise, providing a beautiful safe home. I think that makes a difference when your tenants know that you really care.

Rita: It really does. If you want to be in this game for the long-term, then why not provide a product that will lend itself to the longevity of the tenant. That’s what I looked at and that’s what I’m hoping to achieve.

Kathy: Wonderful. Well, Rita, it’s been such a joy to have you here, you’re truly an inspiration.

Rita: As are you, Kathy. I really appreciate all you do for the investors and also the female investors out there. I also run a women’s group with over 200 women through Liz Faircloth and the investor organization here in South Florida. I really appreciate what you do because we look to you as a great leader also.

Kathy: Thank you so much. It’s been incredible to watch so many powerful women come forth. When I started, it was me and the guys. The rooms were just full of men mainly and maybe a couple of wives would show up but just in the last few years– I really do think it has a lot to do with Liz and the work she’s done and women like you that are creating these investor groups helping women understand it. It’s just transforming overnight. It’s so cool to see.

Rita: It really is. It’s such a fun industry. I’m in this for life. It’s a great hobby that has turned into a vocation. I love being a student of the game walking into a room in which I’m the least educated person in terms of real estate because I love learning about it. It’s really been fun.

Kathy: Awesome. All right. Thank you for your super kind words. It really means a lot. Thank you for inspiring so many people. I think a lot of people are afraid to buy one rental property out of state. To hear somebody bought 20 and in not the nicest parts of town and is still alive to talk about it, I mean, it’s really great. Thank you so much for sharing your story.

Rita: My pleasure. Thank you for having me on as a guest, Kathy.

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