253: Old Dawg Investor Creates Retirement ATM Machine in Just 2 1/2 Years

SHOW NOTES FOR EPISODE 253: OLD DAWG INVESTOR CREATES RETIREMENT ATM MACHINE IN JUST 2 1/2 YEARS

It started with a simple lakeside future retirement home purchase that leveraged into a real estate portfolio that today generates $10K in monthly cash flow — in just two and a half years.  In this episode, Old Dawg real estate investor and telecommunications architect/director Jack Poole shares how he and his wife Judi leveraged their future retirement home into a vacation rental, that leveraged into 6 more rental properties on the way to reaching their ultimate goal of $20,000 in monthly retirement income in the next 5 years.

What You Will Learn

• How to turn a vacation rental into a cash cow to acquire other rental properties
• Why real estate investing can successfully break the dominant “spend down” retirement nest egg strategy
• How a realtor can become your real estate investing mentor
• Why he prefers to self-manage all his rentals instead of hiring a property manager
• How to test a potential investment market by studying local area comps
• A secret strategy that generates large returns from smaller, more affordable, 2 bedroom investment rental properties for millennials
• Why his buying strategy criteria changed as they became more familiar with local emerging market characteristics

About Our Guest

Jack Poole

Jack has spent 33 years in the telecommunications industry and is currently a Director of Technology for a Fortune 20 company, responsible for driving out Solutions Architecture for large scale Big Data predictive analytics and automation projects (all those just understood what I read, please raise your hands – haha).  Anyways,  Jack got his start in the IT industry by programming the automation of new connect phone orders in a college campus environment which later led to his design work of computer telephony integration with call centers, Interactive Voice Response units and customer support personnel.  Later Jack went to a startup during the dot com era as a VP of Research and Design for a wireless startup.  The wireless experience then led to a position at a large wireless carrier where he started the new Identity Management specialized data store responsible for supporting over $1B in revenue per month.  During this time Jack designed and holds a patent entitled “LDAP – replication priority queuing system”, which allows the ordering of the most important events to be replicated to distributed databases.  Undergraduate of Auburn University in Computer Science, MBA @ Kennesaw State University.  In his free time, Jack and his wife Judi like to travel with their 2 grown kids kids, when possible, and love to ski, when we get the opportunity.  They reside in Alpharetta, GA where they are Care network volunteers for North Point Community Church.

More About Jack

• Jack and his wife Judi been in the Atlanta, GA area for over 20 years
• Both work for the same company
• Bought a lake house at Lake Hartwell (right on the Georgia and South Carolina border) about 10 years ago as a vacation home and as the place they hope to live when they retire
• They both love to travel and when they do, they stay in vacation homes, bed and breakfast or AirBNB rentals hosted by local people
• About 3 years ago, they had an idea to rent the home out through VRBO or AirBNB when they are not using it
• They thought it would be nice to be a hosts to other travelers visiting the Georgia area
• The response was much higher than and it turned out much better than they had imagined
• They had the entire summer booked with guests
• They weren’t looking to invest in real estate but the success of the vacation rental started them thinking

The Transition into Real Estate Investors

• Launched a 6-9 month month education to explore real estate investing and the types of opportunities available
  • Podcasts
  • Real estate books on audible
  • speaking with real estate agents
  • Started looking at homes and running numbers on homes in different markets
  • Saw that the Northern Atlanta region stood out as having the best opportunities
• They learned that real estate investing has a lot of categories and various opportunities
• Pursued podcasts, books (discovered Robert Kiyosaki’s books)
• They found they were drawn to single family home longer term rentals
• As they were building up there 401-Ks for retirement, they found that much of their funds were stock market-based and out of their direct control
• The thought of creating an account that they are just going to spend down for their retirement, did not appeal to them
• They  wanted an investment resource that could generate the funds they needed for their retirement and not grow smaller over time
• They saw how real estate could meet that objective by providing cash flow and actually grow larger through equity appreciation
• It eliminated the need to “spend down”
• They also saw it as an opportunity to create a legacy to one day hand down to their kids

First Rental Home Purchases

• They began they real estate investing efforts by setting an initial goal of generating $10,000 per month in net cash flow, to increase over time to $20,000 per month
• The income from the lake house created a cushion for purchasing other real estate assets — they never wanted to get in the position where they were just spending the income from the lake house but, instead utilize that money for future investments only
• They saved the lake house income and contributed from their personal incomes to build an investment pool
• Started looking for long-term rental property opportunities north of Atlanta that were in the “path of progress” – they saw the northern area of Atlanta growing at a faster pace than other areas in the Atlanta region
• Because they both work full-time, they don’t have the opportunity to dig deep to find the best deals
• They just look at retail opportunities on Zillow and other MLS generated platforms
• After 6 months of searching, they found a property on Zillow and connected with the listing Realtor agent with Keller Williams (who had worked for the same company as them before becoming an gent and actually ended up becoming their mentor)
• It was a home that was a rental property, owned by the agent, that he was selling
• They bought it
• He showed them another home that was also being sold by an investor but it was listed under market value and they ended up buying that home too
• They purchased and closed on both properties on the same day
• During the 45-day escrow, they were also able to find renters for both properties
• They signed the escrow documents and their renters signed their leases on the same day!
• They got mortgage loans through their credit union for both properties
• They pulled the deposit amounts and closing costs from their lake property investment profits pool (that they were also contributing to from their paychecks)

Setting Property Acquisition Criteria

• Criteria changed over time
• They carefully assessed what was most important – cash flow or appreciation
• They always saw appreciation as the “icing on the cake” but it became more important as they continued they search for potential investment properties
• First two investment property purchases were homes that were 4 bedroom, 2.5 baths – B or B+ class homes
• More recently, they downsized and are now looking at 2 bedroom/2 bath and 2 bedroom/1 bath but are closer to the city of Atlanta where there is a higher demand for rentals and appreciation is strong
• They are looking at opportunities in terms of cost of the home and rents
• He is typically looking at a monthly cash flow goal of $300 per door for a home with a mortgage and $800-850 for a home without a mortgage (what he’s getting on his last three purchases)
• Target tenant: New family just starting out, may or may not have a child and purchasing a home close to their job

More Properties

• Jack continued to regularly scan Zillow and other sources, seeking other good potential rental properties
• Would analyze the properties by inputting data into spreadsheets
• Jack would also look at the comps in each area to see what houses were selling like like over time
• When he would find something he liked, he would call his agent, show the property to him and discuss the pros and cons of the property as a long term rental property
• They are currently very close to reaching their first goal of $10,000 in cash flow after only 2.5 years of serious investing
• They are realizing that expenses are higher than initially expected.  The vacation rental has the highest expenses
• They self-manage all their properties because:
  • The properties are all close by
  • Require very little ongoing attention
  • Renters pay their own utilities
  • They encourage their renters to take care of the small stuff on their own (changing filters
  • Tenants take care of own lawn care
  • Are already rehabbed, requiring very little maintenance and capital expenses
  • Jack has local repair people can can call if he can’t take care of something that needs to be fixed
• They also flipped a property

Looking Ahead to their Second Level Goal

• Currently, they are focusing more on reaching their next goal of $20,000 in monthly cash flow
• Hope to retire in 5 years

Biggest Mistakes

• Two Big Mistakes
  • Missed Fix ‘n Flip Opportunity
    • Flipped a property when they first started out
    • Did most of the work themselves, including painting and landscaping
    • New roof and HVAC done by outside people
    • The work took longer to complete than they had hoped and they missed the summer buying season for prospective buyers
    • If they had jobbed out all the work, they would not have missed the best time to sell
  • Purchased a Turnkey Home
    • They thought that they had carefully researched and did their due diligence, even went to met the turnkey’s team members
    • It was supposed to be built/repaired for them
    • One year later, they still don’t have a rental property
    • May have to take legal action
    • He recommends that anyone considering turnkey to carefully do that additional due diligence

Biggest Success

• Their lake house vacation rental
• They try to create a great rental experience for everyone who visits
• It’s a 6 bedroom property and 3 or 4 families can stay at one time
• They love creating great experiences and making new relationships
• Not considering more vacation rentals at this time because he sees competition heating up and it’s not as stable or predictable as he would want
• He can get two long term rentals for the same price as one lake house vacation home

Advice for Other Old Dawgs Considering Real  Estate Investing

• If you’re just getting started, look at various niches (single family homes, vacation rentals, commercial, etc.)
• Find your niche and get fully educated about that niche
• Determine “how passive” you want you investment to be, from very involved in the investment process, willing to work on it everyday or something like syndication, whereas you write a check and depend on others to make it work

 Jack’s Plans for the Future

• Since their kids are now out of the house, they are looking at downsizing, moving to a smaller home
• With the proceeds of their current home, purchase another home and use the extra for new rental properties
• Looking at better managing their current and ongoing cash flow to acquire more rental properties
• He has always dealt with the Dave Ramsey vs. Robert Kiyosaki view of assets and the issue of good vs. bad debt and he wants to both own properties outright – free and clear and also have those that have mortgages for the leverage and tax benefits

Rap-it-Up

• Favorite real estate book: The Millionaire Real Estate Investor by Gary Keller
• Favorite business book: Start with Why by Simon Sinek and The Five Disfunctions of a Team by Patrick Lencioni
• Most valuable web site for success (other than your own): BiggerPockets and Real Wealth Network
• Favorite app: Evernote
• Favorite quote: “Kites rise highest against the wind, not with it.” Winston Churchill
• If you had to start all over, knowing what you know, and you only had $1,000, what would you do to launch your real estate investing business? Get a smart phone to stay connected with my team and continue to get educated.

How to Reach Jack

• LinkedIn: https://www.linkedin.com/in/jack-poole-7098446/
• Facebook: https://www.facebook.com/JackDPoole
• eMail: jack@tugaloheights.com

This Episode Brought to You by Stessa

This episode of the “Old Dawg’s REI Podcast” is sponsored by Stessa, a modern software to track, manage, and communicate the performance of your residential real estate assets.  Stessa lets real estate investors automate the busy work so you can focus more on the things you love — like growing your portfolios and spending more time with your family!  To learn more and to get started with a free account, go to https://www.stessa.com/dawg

IF YOU LIKED THIS PODCAST, we would love if you would go to iTunes, Stitcher or GooglePlay and Subscribe, Rate & Review our podcast.  This will greatly help in sharing this podcast with others seeking to learn real estate investing as a means to achieve a successful retirement.

Check out our other podcasts at olddawgsreinetwork.com.

Get a FREE copy of our 3-Minute Rental Property Analyzer at olddawgsreinetwork.com.

Episode Sponsor: Meno Studio – menostudio777@gmail.com