How to Get Off the Work Treadmill with Single-Family Rentals (Video)

In this episode of the Real Wealth show, we'll peek behind the curtain to see the reality of buy and hold investing. Our guest will talk about the good, the bad, and the ugly of being a landlord, and how patience and perseverance can really pay off.

Brent Palmer lives with his wife in the San Francisco Bay Area. His investing story begins with a full-time job as an engineer, two side jobs, and a desire to get off the work treadmill. After listening to the Real Wealth Show, joining as a member, and attending live events, he pulled the trigger and bought three properties in Kansas City. Those first investments came with challenges however, but he stuck with it, bought more single-family rentals in a different market, and has been able to quit those two side jobs. You'll hear his Real Wealth story in this interview.

If you’d like to become job optional by investing in rental property, join RealWealth for free by visiting RealWealthShow.com. As as a member, you'll have access to the Investor Portal where you can speak with one of our experienced investment counselors, view sample property pro formas, and connect with our network of resources, including property teams, CPAs, attorneys, lenders, 1031 exchange facilitators, and more.

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Transcript:

[00:00:00] [music]

Announcer: You're listening to The RealWealth Show, with Kathy Fettke, the real estate investor's resource.

[music]

Kathy Fettke: On today's RealWealth Show, we're going to peek behind the curtain to see the reality of buy-and-hold real estate investing; the good, the bad, and the ugly and how, when you stick with it, it really can turn out very well in the end. I'm Kathy Fettke, and welcome to The RealWealth Show. Our guest today was feeling overworked, on a treadmill. Even with an electrical engineering degree, he was having trouble keeping up with the very expensive San Francisco Bay Area and he didn't see a way off of that treadmill. Then he listened to The RealWealth Show and joined as a member at RealWealth Network, and started attending our live events.

At that time, he pulled the trigger, and bought three properties in Kansas City. Even though those first properties have come with their share of challenges, Brent is still on a mission to build his real estate portfolio. So far, it's allowed him to quit his two side jobs. Brent, welcome to The RealWealth Show. Let's talk about when and why you started looking at real estate as a vehicle for retirement and investing.

Brent Palmer: Well, I was aware of you, Kathy. I had heard you on KSFO, talking of one of the financial gurus, maybe about 10 years ago. I was so touched.

Kathy: That was so long ago. Oh, my gosh, that's funny. KSFO, yes.

Brent: Right. That buzzed around in my head for a time. I was here in the Bay Area. I had graduated from Cal Poly San Luis Obispo in 2006. We were quite fortunate, my wife and I, to land a house during the recession.

Kathy: Wow.

Brent: Right. We got a really great deal on our place. Impossible now, of course, but that was a huge help as far as having that. Upon graduating with my engineering degree, I had this crazy notion, [00:02:00] "Well, wife, you can go ahead and stay at home, and I'll be the breadwinner." She was able to stay at home with our children for a while. That was really great, but I was a little naïve as far as Bay Area cost of living.

Thankfully, we got the house, but still, I was having to work multiple jobs. In addition to my main engineering job, I was working for a couple of tutoring firms on the side, doing statistics and math tutoring for high school students. I was staying pretty busy with that. It was just not an ideal situation, financially. I was looking for a way to get out from that, and really just be able to have one main job.

I was aware of you and so I started looking into the RealWealth Network. I signed up as a member and looked at your material, started attending live events. That was maybe about six or seven years ago, and attended live events for a period of time, maybe. Not a hugely long period of time, but perhaps, maybe over the course of a year, I attended several events.

It just got really comfortable. Then I talked with my advisor, Aristotle. It just felt really like a comparable thing, to go ahead and land that first property and try to transition out of working so much. I met with an affiliate provider in the Kansas City area. I know currently, from what I understand, RealWealth doesn't have a provider in that area, but anyway. At the time, there was somebody so I flew out there, got the lay of the land, was shown around of what rehabs looked like, what completed properties looked like. I went ahead, and this was in 2016, in the span of about nine months, acquired three [00:04:00] properties. Then I set up--

Kathy: Wow. All in Kansas City. That was probably a big learning curve there.

Brent: That was a big learning curve. I had stayed, of course, quite busy with my jobs, but I ended up making the transition with my main day job to another employer and so I had some company stock. That helped me then to go ahead and be able to get the funds for procuring those properties, because I was just busy. It was like, "How are you going to get the funds here to go ahead and procure a property?" That just helped. It definitely made it possible for me to get those properties.

I know that's not for everybody, but I'll admit I had listened to some Keith Weinhold as well and that influenced me, where if you're in a rough situation, just go ahead and take the tax hit. I was young enough. I felt my risk tolerance was high enough, that I was comfortable going ahead and using those funds that were for the company's stock, and going ahead and using those as down payments for my three properties in the Kansas City area.

Kathy: Yes, as you mentioned, we're not working in Kansas City anymore. I think it's a great place. We just didn't have luck with property management there. We had difficulty with the older homes. It was a tough market, even though there's a lot of growth there, at least for us. I know that you experience some of that. What's the ugly side of real estate, and investing out-of-state that people need to hear.

Brent: Right. That's true. That was a challenging market. I was definitely gung-ho because I wanted so much to be able to quit my side jobs, [00:06:00] and just have more time. I grabbed those three properties. Unfortunately, one of them did get placed with a bad tenant. I can't recall. It might have been actually the second tenant on one of those. She looked good on paper. She passed the background check, looked good. She had a job with Kansas City Medical Center even.

That Kansas City affiliate actually had brought in and developed a property management company in-house. I was with that property management company. At the time this tenant was giving me grief was about the same time that that property manager actually folded. I wasn't aware. She had actually left town, and left the bathtub faucet on and at full blast.

Kathy: Oh my gosh. What a--

Brent: Yes, I was faced with an astronomical water in utility bill. [chuckles]

Kathy: What about damage to the house?

Brent: I was fortunate in that the rehab had been done well enough to where-- the tub didn't overflow, the piping was good.

Kathy: It was just water loss. Oh, my gosh. That would be a real crime. You'd get arrested for that in California. We can't waste water like that. [laughs] Oh, my gosh.

Brent: Right, pretty hard.

Kathy: Do you think she just forgot?

Brent: I'm sorry.

Kathy: Do you think she just forgot to turn it off, or intentionally--?

Brent: No because, let's say, I had photos of some other parts of the house that definitely would indicate no. There was, I think, some intention with that [chuckles]. I don't know. She didn't know me from Adam, but anyway.

Kathy: You're "the greedy landlord", I guess. I don't know. Oh, I'm so sorry. You had water bills. [00:08:00] Sometimes, in certain states, there is a lesson there, that if t