Epic Real Estate Investing - 8 Cash Flowing Rentals in 24 Months | 1136

Episode Date: April 1, 2021

In today’s episode, Mercedes is joined with Omar Ahmed, a Turnkey RE investor who has acquired 8 cash-flowing rentals in just 2 years! Tune in and find out how Omar started his real estate endeavors at age of 21, why he chose to invest in out-of-state turnkey operations (& specifically with Cash Flow Savvy), the biggest lesson he learned from purchasing 8 rental properties, and much more! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terrio 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 Tuesday on the Epic Real Estate Investing show for Turnkey Tuesdays with your host, Mercedes-Torres. Hello and welcome. Welcome to Turnkey Tuesdays brought to you by Epic Real Estate Investing. my name is Mercedes Torres, your turnkey girl, and I am lucky enough to be partners in crime with Mr. Matt Terrio, the guy who created the epic real estate empire. I help busy professionals

acquire passive income through real estate investing so they don't have to work so hard and maybe even retire sooner. So I created this show to share tips, advice, and real life, real estate experiences and people so that you too can create passive income. in your world. That said, if this is your first time here, glad you made it, make yourself at home. If this is not your first time here, welcome back. So this week, we have something super special to share with you. Well, I guess that's biased because all of my guests are special. But this one in particular is special because he started off as a podcast listener. Now, he started his real estate endeavors when he was 21 years old and bought properties in a hot market at the crash of the market.

So he bought really, really well. And then he sold the properties. And then it dawned on him that he needed to buy again because passive income was introduced to him. So without further ado, I am going to share with you a client who has become a friend of Cashwell Savvy that just in two years has acquired eight rentals, eight rentals in two years. That is impressive. So without further ado, I'm going to welcome to our show, Omar. Omar, can you hear me? Yes, can you hear me. I can. Welcome to the epic real estate investing show. I hope that. that during these crazy COVID times, you are doing fantastic.

Yeah, everything's going well here. We all got our vaccination, so we're happy to finally see the light at the end of the tunnel. That is so, so true. Congratulations, because not everyone has been able to get vaccination. So kudos to you.

So Omar, introduce yourself. Tell me about you, tell me about who you are and what you're up to in life. So my name's Omar. I'm an engineer. I worked for the county and I've been in the field for maybe 13 years now. And I started in real estate investing when I first graduated college, so back when I was 21. And I was buying houses out here in California.

And I was working those out. And then this was right after the crash that were a lot cheaper back then. And after, this was right after the market crash. And back then, you could only buy four, forget, four mortgages before the banks would stop you because of all the financial regulation that was going on at the time. So then I stopped after four, which I shouldn't have done. And I was managing them all myself, which I also shouldn't have been doing. But that's what it was. So let me ask you, at 21 years old, I was parting up a storm. I thought I had all the answers. And in hindsight,

of course, when you're 21, you don't have all the answers. So what made you at 21 years? years old buy four rental properties. So I actually watched my parents buying rental properties when I was a kid. They started back in the 90s and they were buying them, repairing them, refinancing them, and then using that money to buy another one and they, you know, chained it as far as they could at the time, which I think they went up to maybe nine, 10, maybe more properties. I'm not even sure. And watching that model and how it worked, I want to follow that and do the same thing.

So that's why I started as early as I could. So your parents would buy the properties. They would fix them up, put tenants in them. And it looks like they would refinance them and kept them because they went up to 10 and possibly more, as you just shared. What made you decide to sell your properties if your parents were buying and holding and refinancing and repeating? So my plan at the time was to buy low after a real estate crash, wait for it to appreciate. sell them, wait for it to crash again, and then re-buy it at a lower price. But I've since discovered that having passive income through rental properties that's consistent and more predictable

long term would be much more effective at retiring myself in the future than trying to capture capital gains every cycle. I happen to agree, sir. So passive income, how did you discover passive income? I've always known about it. And that, That's kind of why I started with it, but I never equated it to, you know, if you make your passive income equivalent to your salary, then what you need to salary for? I never connected those two together until I started getting more interested in doing more research. And that happened, you know, after I had sold three of my four houses. Ah, I understand. Okay, so great.

So how did you discover epic real estate and cash flow savvy? So, I mean, one day I was just commuting home from work and I just realized I should be listening to some. something educational or something that'll be productive rather than wasting it, listen to whatever's on the radio. So I just looked up real estate in a podcast library and yours was, I think, the first one to pop that. So I just decided to give it a shot and that's where it started. And here we are. Two and a half years later. Awesome. Okay, so you learned about, you started learning about real estate and other aspects of it. You had managed your own properties, you bought at the low of the market, you sold and were profitable, and then

you decided, okay, I'm going to listen to Cashwell Savvy, I'm going to listen to Epic Real Estate, you called our office, and I remember the first time you and I talked, what made you decide to go trunkey and specifically to go out of state? Like, why didn't you just stay in California? You had already been buying properties in California. Why didn't you just stay there? So actually, before I contacted you, I was looking in California. I was looking at California. I was looking at, because I was trying to buy back in, I was looking at single families, multi-families, apartment buildings. I spent probably almost a year talking to real estate agents and looking at houses. And I found very consistently that I could not get anything

that would return to cash and cash return better than three and a half, maybe four percent at the best. And out of state, the numbers looked a lot better, but I just didn't have any system in place to manage and acquire those properties. Got it. And so, you contacted our office. Tell me about your experience. So when I contacted you guys, it was after, so before I contacted you guys, I actually listened to your entire podcast library at the time. So I think it was almost a thousand episodes, start to finish. And I was actually picking me up because your first episode started in 2011, I believe. So I went through about eight years of podcasts and I was able to watch,

quote unquote, your business grow from, you know, coaching. the academy, to cash flow savvy, to the epic wealth fund, to mastermind groups. I watched the whole thing grow. And that gave me a little bit more confidence that you guys are legitimate, because other than that, you're just a voice on a podcast. So watching it grow over the years, gave me a little more confidence. And then I decided, you know, let me talk to these people. Let me see if it's something that's going to work for me.

That just gave me the chills because you just went through our whole journey. You're right. We started podcasting in 2010. In fact, I'll share a funny story. I was pregnant in 2010, and so we had the Epic Pro Academy. And one of the reasons we started the podcast is just to teach people how to do this and hopes that they would find the Epic Pro Academy. And so then we just kept growing.

But when Matt said to me one day after we created the Academy, he says, Mercedes, I'm going to start a podcast. And I said, great, what's a podcast? because back in 2010, nobody was podcasting. So you just help me go through memory lane because you're right. We have grown. We have evolved. And then we get amazing people like you that follow our journey and then hop on board.

Sometimes it takes people, you know, five years before they contact us. And sometimes they contact us right away. So kudos to you that you actually did it. So that makes me really happy. So having said that, when you found us, did you interview? you other turnkey operations? I hadn't because I wouldn't have that same level of familiarity with anybody else because I watched you guys, you know, from the beginning to when I contacted you. Although a few months after I started with, started our relationship, I did run into the owner of a,

I guess, a competing turnkey provider. And it was not a Phoebe group, a four investors, buy investor group. And he was giving the presentation. And I asked, him when he asked for questions if what would set his company apart from other turnkey providers. And he wasn't really able to give me a very good answer. It sounded more like a marketing slogan or we're better at this or we provide this or just, it almost sounds like he was just making stuff up. But asked him one-on-one afterwards, more detailed questions about which markets they're in, how many properties they buy every month, where their providers are at, just detailed questions. and he didn't really know.

I guess his organization's so big that he counts on some of his staff to do that. But maybe they're fine. I don't know. I never investigated it further. But when I was talking to you on the phone, I remember you knew exactly, you know, we buy this many properties a month, these markets, these are our people, each ones, these are better performing ones. These are the, you know, more mediocre ones.

And I just felt like you knew more about your organization than, you know, maybe some of these other people did. Yeah, that's crazy. Well, you know, it changes when you know, it changes when you own properties in that same market. In fact, the reason we are in the markets that we're in is because we personally own properties in those markets. In fact, I'm neighbors to some of the properties that you own Omar because we're both in Alabama. So yeah, it does make a difference. So thank you. That's a compliment. So walk me through the process. You and I talked on the phone. Walk me through what the cash flow savvy process is like for someone that's considering a turnkey

property but just doesn't have the 100% assurance that it's going to work for them. What happens when you contacted me? So when I contacted you, you told us the way it would work is we would submit a deposit and then we would put in the queue and then you would be emailing us properties that we could look at and see if we want to buy it or not. And then if we wanted it, we would tell you if we didn't want it, it would be move on to the next investor. Just don't remember when you sent us the first list, I had one.

you had one in Birmingham, one in Arkansas, and another one in Birmingham and another one in Indiana. And I don't know anything about any of these states. I'd never been to them, I don't know anything about them, and didn't really know what to do. Yeah. But then I was thinking, you know, the one of Birmingham was I think 90, 99,000, I think, something like that. And I remember thinking that, you know, if I buy this and if it doesn't, work the way it's opposed to if it doesn't perform if it's I'm overpaying for it like I don't know what I'm getting into the worst case scenario is I sell it at a loss maybe lose five ten thousand dollars and go to something else but if it does work then I can you know

expand on it scale it and I might be able to retire myself 10 15 years earlier and that seemed like a good thing to bet on where the worst case scenario is I can lose a few thousand the best case scenario is I get 10 15 years of my life So I decided to just go for it and the rest is history. Yeah. You know, you, Omar, are one of the few people that actually flew on a turnaround trip to Birmingham to go see the property, to go walk the streets of Birmingham. By the way, congratulations. You made the 1% club because less than 1% of my clients actually fly to the markets to do it.

But you were that special one, Omar, and you flew. Tell me all about that experience. How did my dream teach you on the ground share with me what that was like? Yeah, that was actually really good. I'm glad I did that because I did go out there. I got to break some of the either stereotypes or images or whatever I had of the area. I can see it myself, see what the town is like, see how big the city is, the traffic, the streets, where the businesses are, where the houses are. I met up with your provider there and she actually pulled up a bit of this.

a large wall map of the area and they're pointing out, you know, these are areas invest in, these are areas to stay away from, and they give us a nice breakdown of the entire region. And then she drove me around to a bunch of the houses that they had that were undergoing rehab and we could see their system and, you know, they have the same paint, same carpet. They do the same treatment for all of them almost like an assembly line, which makes it very efficient. And she showed us the house we're going to buy, but then when we went to the next one, she said, oh, yeah, the buyer just fell out of this one. I was looking at it.

The price was the same. The rent was higher. And I've already seen it. So, you know what, let me just buy this one too, because that way don't need to fly out a gift. I know. I know. That's another exception to the rule.

My buyers don't go and buy the random next property. So, yeah, I remember when I heard about that, I laughed because I thought, oh, he just got the bug. So I love it. Yeah. Our teams on the ground are phenomenal. We represent a large portion of their business. In many cases, we partner with them.

So they do treat our clients with epic royalty. And so it's not uncommon that when they do fly out there, which doesn't happen very often, they do get the royal treatment. And one of the things that's really important to me, I'm a visual person. So it's important to me that my buyers understand the locations that we buy. in and that we don't buy in. And it's important to me that they get a visual of their property, whether it's via an inspection report or a physical walkthrough. And so I'm glad that you got to experience that. And your experience was so positive that you ended up buying two properties

on that visit. So from this whole experience, you then come back home. You decide that we're going to buy the second property, which made me laugh out loud. We get you a contract. You get that second property rolling. Then what happens? What was, did you get to inspect the properties? Did you get to appraise the properties? Tell me about that. Well, those first two, I actually ended up buying cash because once again, I didn't know what I was getting into. I didn't know how it was unperform. And I didn't want, you know, a thinner margin because I had a workage payment to make on it. So I didn't take advantage of leverage on those. I ended up buying cash. And just to make sure I worked the way it was supposed to. And then I started to start to,

when I got more confidence in it, then I started buying them, you know, with financing. So I could buy more of them. You finally took my advice and maximize leverage, right? Yeah, I mean, that's something I always knew. I knew I'd lose a little bit of rate of return by buying a cash, but I did that kind of hedge myself against the unknown. Yeah, yeah, that's true. I mean, and here's the reality of it.

Now that you own them free and clear, you can pull a mortgage on them anytime. You can do a he lock or you can cash out refinance them. I mean, you have options. And if worse comes to worse, worst case scenario, if you want to get out of them, you can sell them. And I'm 100% sure you will sell them for more today than what you had them. But I'm not going to let you make that mistake. So let's not even have that conversation. So once you close the properties, did my team help you get insurance?

Did my team help you with the closing? Since you're in California, the properties were in Birmingham. walk me through that closing process. Yes. So with the ones we were buying cash, there's no lender involved. So it was just me and the provider out there. So that went, I mean, that went very smoothly. They definitely walked me through everything.

I'm not new to escrow. I bought and sold, you know, dozens of properties before this. So I wasn't completely green with that. But yeah, I mean, it was very easy. It wasn't any different than buying a house here. Okay. And so because you were here in California, California and the properties were in Birmingham, how did you do the signing?

Did they send them to you via DocuSign? Did they send them to you via email? How was that signing? So the purchase agreement and the paperwork had to do with them directly, that was through docise on email. The actual the deeds and everything had to have that notarized here and then had to mail the hard copy over to the closing agent out in Birmingham. Cool.

And then you wired the funds at closing. Yes. Awesome. Okay, so that's only two of the eight rentals that you've picked up. So what happened that you decided to leverage? So what changed your mind about buying them in cash versus now putting a mortgage on them? Well, I mean, I've always known that when you put a mortgage on it, you will get a higher rate of return. So that was always the end goal.

But once I felt comfortable that, you know, this is legitimate. this is a real manager company. These are real tenants. These are real properties. And I knew kind of what I was getting into. I'd seen them. Then I felt more comfortable, you know, getting a smaller profit margin because I have mortgage now,

but then spreading it out over multiple properties, which ends up netting more at the end. And that's why I was able to scale so, I guess, so much in the last couple of years because now everything I'm buying is, you know, 20% down, 80% financed. Yeah. Fantastic. I love that. What would you say that you went from, you know, a cash on cash return when you had your California properties?

Would you say that your return now is equivalent? Is it better? What's your take on the difference of what you had before to what you have now? I don't know if that's really a fair comparison because I was buying them before in 2008 and 2009. And those were actually cheaper than the ones of Birmingham today because of the, market conditions at the time. So those I was cash flowing a lot more because I was getting, you know, $1,000 a month on each one versus here I'm getting, you know, maybe $300. Yeah. That's a great point, Omar, because imagine, and I know you're already regretting this and I don't mean to bring it up again,

but just imagine if you would have just kept those California properties and you didn't sell them, what would your portfolio look like now? Because this is big for sure. Yeah. It would be substantial because those mortgages on those properties were less than my mortgages right now on my permanent ones. Yeah. Well, you live and learn, right? Yes. I love it. So putting that lesson aside, what has been the biggest lesson that you've taken from this experience of acquiring eight rentals in a completely different market from the market that you live in? I mean, the biggest thing would be it's something you guys say fairly often is live where you want and best where it makes sense. And me being in a 2000 miles away from the

properties themselves really doesn't do anything to impact the rate of return. Even the property I have left here, that one I'm I could drive to it, but I still got a management company forward anyway because I just don't want to deal with it anymore. So whether I have one in my backyard or whether I have one across the country, I'm still going to have it managed. I'm not going to do it myself and it doesn't make a difference to me where it is, as long as the numbers make sense. Yeah, that is absolutely true. And, you know, I'm so glad you repeated that because I get tired of telling people, because the notion of them owning something that is not a drive away, it keeps people

from investing, like a vast majority of investing. And people that live in markets like California or like New York, where investing for cash flow just doesn't make financial sense because it almost doesn't exist in their market. It's the hardest, the biggest hump for them to get over is exactly what you just said, is investing out of state. And you're right, where you live, there is no correlation between where you live to the rate of return on your rental. It is perfectly said, Omar. So thank you for saying that. That's another reason I flew out there because I was thinking, why would I let a $1,000, you know, plane ticket, an hotel room, stop me from looking at investigating a market, meeting the people, the accountants, the customer

service, people, the maintenance crew, the contractors, the acquisition team. It doesn't cost a lot of money compared to what you're investing. So it didn't seem like that big of an obstacle once I thought about that and just fly out there, meet everybody you feel better about it, and then you don't have to worry about it anymore. Now I know who I'm talking to on the phone. Yeah, that is absolutely true. And, you know, now in nowadays, you know, a lot of the conversations happen via Zoom. And just with online, I mean, you can check out any business and you can do so much from the comfort of your own home. I mean, that is, I mean, millions of miles away from when I started because Zoom didn't exist when I started. You know, I still had to do it the old-fashioned

way. And when today's technology and just the abundance of appraisers and inspectors and just different aspects of real estate, it is so much easier to do it today than it was just so much as five years ago. So you've overcome a huge hump just with your mindset, Omar, so I commend you for that. So what would you do differently from this point on acquiring properties, buy and hold? If you would do anything differently, would you change anything? The only thing I'll probably change is eventually moving to a second market just to spread out my locations a little more. I'm trying to get to a point where I feel like I have enough in one working before jumping to them next because then I don't need to form a new LLC, a new state, new taxes, like a whole new system to take care of that subset of property. So I want to build my first one up to a point where I'm comfortable with where it is before I jump in.

to the next market. But that is probably going to be my next step and think something I'll do eventually do differently. Well, you know, considering you're only in one market, you've done it right because you've diversified price points. So, you know, you've got your lower price point properties in Birmingham and then you have your higher price point properties, which makes a huge difference because I'm a strong believer that the price point of your rent often dictates the caliber of your tenant. So I think you've done it right considering. And a second market, is never a bad thing. So good for you. Awesome. So I think it's fair to say, Omar, because, you know, the reason you and I reconnected again is because you constantly talk about your experience and you

have sent friends, colleagues, family members to me. I mean, you've referred so many people to us. And I always say that I'm humbled and I'm grateful for that. But there's a reason why you keep talking about us and keep talking about what you've created. So share with me what makes you continue to talk about what you've done with us. Well, I'm not at all secretive about what I'm doing. I'm very open about the fact I'm trying to retire myself, about the fact I'm building, you know, passive income to try to replace my salary. And this is not something I hide from anybody. So when people are curious, they ask me, what do you do? How do you do this? What's the process. And I tell them, I tell them, this is why I contact, this is where I'm buying right now,

this is where I'm looking at in the future. And some of them take the step and reach out to you. And a lot of them haven't actually taken action on it yet. So you may seem more. I'm flattered. Yeah. I've worked with your brother-in-law. I'm currently working with one of your colleagues. I've served people that you work with. So truly, thank you for just sharing, just sharing period, but really just you're making a huge different in someone's life because what they're creating with just buying a property and holding it, what that does for someone's future and the potential that it has is potentially life-changing. So you're making a difference, Omar, and I thank you.

What advice would you give a new investor who is considering buying a turnkey property to hold? I guess the thing I would suggest is to expand as quickly as you can. The very, I mean, as you know, the first set of houses I bought in the first year I had to go through an eviction, which is the worst case scenario for a landlord. And it can get expensive, but I was able to go by the end of the year, I was back in the black, all my other properties that were performing kind of supported it. And I know I talked to you about this, you know, back then. And when you hit a portfolio of a certain size, you know, be at 50, 80, 100, whatever it is,

you're going to have a certain number of problem properties every year and it's going to rotate. And the other ones will be, you know, covering that deficit. So you're never coming out of pocket. And if you just have one property and you take that hit, then that's going to be something that could scare you. So I would say to build out as many as you can so that if one is having a problem, it won't impact you as much as it could. that is so well said. That is very, very true. And, you know, evictions and, you know, vacancies and turnovers is part of real estate investing. You know, there is a human element aspect to real estate. And that's kind of what comes with the territory. But what also comes with the territory is

tax advantages, cash flow, appreciation. And sometimes, oftentimes, in fact, more times than not, those three things outweigh what the human element can do. So I'd have to say, Omar, you've done it 100% right. So it's absolutely. Not a penny in taxes on any of the income of a bid for any of my properties. It just, it really is a tax-free environment. Yeah. I don't know. I've said that in every episode, just about how much of a tax benefit real estate is. And, And until you experience it, and specifically in your case, you know, you bought eight rentals in two years. That's like on steroids, real estate on steroids, but the fact that you can see it in just two years, I mean, you're in your early 30s. I have no doubt if you really wanted to, you can retire in the next, not even 10 years, but I'm just going to throw that number out.

Within 10 years, you can retire doing what you're doing. It's that easy. I'm shooting for five, but we'll see. You know, I did it in three and a half years. I know you can do it in five. I've had people do it in five years, and it's not rocket science. It's not impossible. It's doable.

You just have to jump. And the hardest part of this whole ordeal is taking that first step. So, Omar, I commend you because you took that first step. You realize you didn't do it 100% right. So you took a step back, rejumped in. And I think you got it 100% spot on. So congratulations. to you, Omar.

Well, thank you very much. It's been a very, very interesting journey. I've used a lot of your people. I actually went back and took one of your attorneys that you used in another podcast and used them to draft up the paperwork. And I've used your inspectors. And I think I even told you that.

But yeah, I've used a lot of the people that you interview. I absolutely love it. I mean, that is the reason why we do this. And if you contact our office and say, hey, connect me with, you know, one of your attorneys, I will be more than happy to do it. That's what we're here for. So, Omar, thank you so much for taking the time to have this conversation with me, to share your personal experience, your knowledge, what you did back in the day and what you're never going to do again. And it really is going to make a difference for one person out there.

And maybe that one person is you. So if you are, listening to this and want more information on how to create passive income in your world. Please do not hesitate to reach out to the cash flow savvy and epic real estate world. Go to cashflow savvy.com. That's savvy with two V's. Download the frustrated investors guide to passive income or hit the contact me. I can hop on a call with you. So can one of my team members and we can create for you what we helped Omar do. So Omar, Thank you so much for joining us on Epic Real Estate Investing Podcasts, specifically on Turnkey Tuesdays. I cannot wait to have you back on the program when you retire in just a few short years so you can continue to tell our story.

Would you be open to that? Absolutely. It's anything I can do to give back to the community. I love it. I love you. Thank you so, so much. Have a amazing, amazing weekend. and I look forward to connecting soon. Thank you. All right, thank you very much. All right, bye-bye. 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 cashflow savvy.com.

More building. less waiting. Cashflow savvy.com. This podcast is a part of the C-suite radio network. For more top business podcasts, visit c-sweetradio.com.