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SHOW NOTES FOR EPISODE 079 – BUY & HOLD INVESTING AND AVOIDING SHINY OBJECTS
As a new couple, Brie Schmidt and her husband were looking for a creative way to buy their first house in high-priced Chicago. Buying a triplex, living in one unit and renting out the other two seemed like a good solution. Little did they know it would evolve into a full-fledged real estate investing business with over 30 properties and growing.
What You Will Learn
- How “house hacking” (living in your investment property) is a great way to get your first home and first investment property
- Why many investors can’t last more than 10 years in “high touch” cash flow markets
- How “Analysis Paralysis” and “Shiny Object Syndrome” can’t really hurt your real estate investing business
- The importance of determining your real estate niche early on
- A great website that is like a “Yelp site focused on Turn-Key Real Estate Companies”
- The importance of “trusting your gut” in real estate investing
- How the cheaper the property and area, the more work and effort the property will require
About Our Guest
Brie Schmidt
Brie started purchasing investment properties in 2011 when she founded BBS Apartments. She currently owns and manages 90+ rental units in Chicago and Milwaukee. Brie utilizes her extensive knowledge of building and managing a portfolio to teach clients about all aspects of buy and hold investing. She owns her own Brokerage company in IL and WI and works with both new investors and seasoned investors looking to expand their portfolio.
Brie is also the President of TurnKey-Reviews.com; the one-stop shop for passive investing in residential real estate across the United States. With over 100 providers in 25 cash flowing markets it is the most comprehensive site on buying turnkey properties.
More About Brie
- Lives in Chicago
- She and her husband were looking to buy real estate
- Wanted their own home
- Lived in area with not that many SFRs but many small multis
- Bought a triplex and lived in one unit, with the intention of one day converting it to their family home
- They did not plan on being investors
- Over time, they saw how easy it was, and decided to buy more properties
- Set the goal to buy 4 properties and today have over 30
Real Estate Agent
- Brie is a real estate agent licensed in Illinois and Wisconsin
- Works mostly with other real estate investors
- She is currently looking for properties for herself in Milwaukee and looks in Chicago for properties for her clients and other investor clients so to not compete with clients
Her Purchase/Management Strategy
- Three different markets
- Appreciation-Based – large coastal cities, buying for long-term appreciation gains not cash flow
- Balanced Market – Chicago, an OK cash flow market but not great, 7-8% Cap properties
- Cash Flow Market – Milwaukee, good cash flow for 8-10 years, sell property for what you bought it at
- Her portfolio is split 50/50 between Chicago and Milwaukee
- Chicago laws are more pro-tenant, Milwaukee more pro-landlord
- One third of the properties she buys are from out-of-state investors who are failing
- In talking with some of the investors who had failed, she found that it is really difficult to own properties in “high touch” Cash Flow Markets (Milwaukee)
- A lot more work
- Vacancies (6-9 month), turn-over, expenses a lot higher
- Requires day-to-day management
- If you only have a few duplexes in the area, you are not a priority to most property managers
- Brie manages her Chicago properties and has a PM for her Milwaukee properties
Her Biggest Mistake
- Had a “Analysis Paralysis” moment
- Not sure what direction to go
- Just did major re-fi on current residence
- Tookt 6 months off just reading about different types of investing, different areas of investing
- Started questioning what she was doing
- Ended up developing “Shiny Object Syndrome”
- Made checklist of different types of investing
- Ended up being a waste of time and caused them to miss out on many opportunities
Biggest Success
- Trusting her gut instinct
- Especially involving the home they lived in where their gut said to rehab, despite the high cost
- And, after her Analysis Paralysis moment, her gut said to stick with their original buy & hold strategy
- It turned out to be a great decision
Advice for Those Who Want to Get Involved in Real Estate Investing
- Educate yourself on the many options out there (flipping, buy ‘n hold, funding REI projects as private investor, deeds, liens, etc.)
- Identify your niche
- Do your due diligence, especially on people you may work with
- The cheaper the property and area, the more work generally involved for you
- A and B class neighborhoods and properties are less work but less cash flow, too
The Type of Properties Brie Purchases
- Chicago – $500K properties that yield $4,500 per month in rents
- Milwaukee – $100K properties that yield $1,400 in monthly rents
- Only purchases small multis (duplexes, triplexes, four-plexes)
- Multis – cons
- People don’t stay as long
- Sometimes when one tenant leaves, the other follows
- Multis – pro
- Utility splits
- If tenants like each other, they can stay longer
Future of Brie’s Business
- Will either double or triple what they have or sell it all and do something completely different
- Many investors quit after 10 years
Her Turn-Key Website and Podcast
- Brie is very active on BiggerPockets.com website
- Noticed many people struggled with turn-key properties
- Brie and a friend decided to put together a “Yelp-Like” site for turn-keys where people review turn-key companies
- Her podcast: “The Turn-Key Investing Podcast”
- Tips for Turn-Key Buyers
- Always visit the property and company in-person
- Always have an inspection with your own inspector and if you can’t be there, hire someone to go for you
- Never rely just on pictures
- Remember your due diligence
- The website: Turnkey-Reviews.com
Is it better for an investor to have a real estate license?
- She’s always seen it as a benefit
- You always have to disclose you are an agent when buying
- Licenses can cost $2,000 per year to maintain
- Can do things in her own time – can speed up the purchase/sales process
- Sometimes takes a commission
- 50% of what she buys is off-market
Rap-it-Up
- Favorite real estate book: Hold by Steve Chader and the Millionaire Real Estate Investor by Gary Keller
- Favorite business book: The One Thing by Gary Keller
- Most valuable website for success: BiggerPockets.com
- Favorite app: Mint.com
- Favorite quote: “I do not regret the things I’ve done but those I did not do.”
- If you lost everything and only had $1,000: She would use it to buy a duplex on an FHA loan (3.5% down). Live in one unit and rent out the other. Save money for future investing
How to Reach Brie
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