Adam accidentally discovered the power of investing in real estate when he bought his first property in college. He managed to live rent-free via a house hack. Now, he’s built his real estate portfolio to over 25 properties. He and his wife do this to empower the life they want to live.
He uses his engineering background to creatively structure his investments to maximize cash flow and help people become homeowners along the way with his model: Set Your Rent: Lease-to-Own Homes.
What is your engineering background?
I am a civil engineer with an emphasis in environmental engineering. I specifically am working on drinking water treatment.
It started a little bit different where everyone in the engineering field is probably doing more calculations, reports, specifications, the desk work stuff that they didn’t teach you in college. But now that I’m ten years in, I’m getting more into the business development side, which scares many engineers, but it fits my personality a little bit more.
It’s probably 50% selling and 50% actual engineering for me.
How did you become interested in real estate investing?
When I was younger, I was taught to invest in myself. That was in the form of getting good grades in high school so that you could get some scholarships to go to school without paying so much potentially.
And then, in college, if you do well and get a high GPA, you’ll get a good job. It was this delayed gratification, almost like the marshmallow test that they do with the five-year-olds. You can have one marshmallow now, or if you wait five minutes and have two later. The little five-year-olds are sitting there squirming, but those who can do that can have the discipline to wait; the statistics follow, showing higher levels of happiness and success.
I feel like engineers subscribe to that. The idea that I’m going to put in the work now to reap the rewards later. That worked out for me; through college, I got a high GPA, then I got the job. Then it’s okay, now what’s next? Stash away for the 401k because I’m investing in my future.
Then at some point, you realize I’m going to be doing that for 40 years. And you’re like, “what?” I get delayed gratification, but five minutes versus 40 years, there’s a big difference there. Then the only way to curb that I saw was to open up my own business, gamble, get into real estate, or questionable activities.
Personally, I tried a bunch of different ideas and thoughts, but then the real estate was the one that just seemed like it made the most sense.
How did you get started?
I was 22 and bought a home without really the intent of getting into real estate. But I got a home and lived with some college buddies. And I was like, “Oh, we can just have a house instead of this, crummy dorms. And we can party, we can have some fun. it’s our own home.”
And then, once they started paying the rent, which covered the mortgage, I realized that I was living rent-free for a couple of years. I was like, this thing’s pretty cool. Let me try this. So I started in the room-rental house hack style.
I realized that I was living rent-free for a couple of years. I was like, this thing’s pretty cool. Let me try this.
That got me into it. But we almost sold it. My fiancé, and now my current wife, almost did what everybody does, where you get a home, get some equity, sell it, buy a bigger house than you wait five years, and get equity. Then you buy another one, and then you just keep going that way.
We were risk-seeking enough to keep that one. It had a bunch of problems at first. We almost didn’t get into real estate but decided to keep it. That was the first one. And now we have 25.
So that was your first investment. My next question was going to be, what was your first investment? Maybe you can tell me about your second.
The second one was like five years later. The second one was a standard three-bedroom, two-bath. I was like; I think that I can make the numbers work on this. I think I can add a fourth bedroom and increase the rent. It was a little value-add project. And then, when I found BiggerPockets, I got absolutely hooked on everything real estate. They will change your whole mindset on real estate. We had enough capital saved up over that time that I was able to invest in that one. It was the standard 20% down.
So it took me a long time to get that second one from the first. But then, from there is when I formed an LLC with my now-partner. We take team capital and experienced to scale.
What did you learn from those two first investments?
Sometimes I wonder, is it better to fail or read what not to do? And I think for me personally, I figured out the hard way, everything that they tell you not to do.
That really stung, and I didn’t have BiggerPockets at that point. I didn’t have other people lean on it. It was just me figuring stuff out, which is a recipe for disaster. But through all of those failures, you learn what not to do pretty quickly. And that second property, I thought I paid too much for it.
I didn’t think we’d make money when the tenants flooded the basement the first year of renting it. We never thought we were going to make it with that one. But it seems like, in real estate, time heals a lot. Just being in the game was the most important thing because that is, by far, to date, my best-performing asset. Now I also got a home equity line of credit on that one that I can pull money.
I didn’t think we’d make money when the tenants flooded the basement the first year of renting it. We never thought we were going to make it with that one. Just being in the game was the most important thing because that is, by far, to date, my best-performing asset.
Now it is buying power for other properties while still, cash flowing. Just getting in the game, I feel like the most challenging part. Even though it wasn’t making money for three years, now all of a sudden, I go, “okay, I figured out a lot of stuff by doing it.” If you can get into something and not completely lose your shirt and be out of the game if you just break even, but all you did was learn something, that is a win. I learned a ton.
How has your engineering background helped you with investing?
Mostly discipline and professionalism. I would argue that engineers like their systems and processes. But just how to structure an email; how to be accountable. It’s not like I used my professional engineering stamp for a technical advantage.
It was more the professionalism you get within an environment on working with other people, seeing a project through from the start to the middle to the completion, and just thinking big picture about it.
And of course, operating spreadsheets and knowing the numbers and return on investment, the running the numbers helps.
And then lastly, I would say it’s just solving interesting problems. Engineers maybe don’t get credit enough for being creative. But I feel like that’s what we’re trying to orchestrate in the design of a project or the design of real estate investment.
I’m always thinking, what can I do creatively to make this work for everyone?” It could be a rental, a flip. How do I make the seller and my client happy; how do I make our team members happy and our project profitable.
The downside of engineering is that you don’t get connected with other like-minded real estate investors. Engineers are often into the Job and just keep working at it for 20 or 30 years until you retire.
How many deals have you done so far?
I’ve done probably about 40 transactions. I either own 100% percent or own 50% better on the better part of 26 properties, mostly all single-family. I have done seller financing; I have bought off Craigslist; but mainly bought off the MLS, primarily commercial loans. Recently it’s more of our creative way of buying multiple kinds of properties with our set-your-rent model.
What is your long-term goal for your business?
That is starting to emerge. I think before people use the business to satisfy their personal goals of potentially either retiring early or fulfilling some creative juices or ambition. For me, it was always to gain more freedom, being able to do what I want to do on a weekly basis.
Now that we’ve created something that we’re genuinely helping people become homeowners that couldn’t. Now, that’s the new goal without sacrificing the time with my family, my health, and the things that I hold dear. I’m creating something that is more designed to fit what I want to do in life, as well as giving me something to do and people to help.
But it wasn’t always that way; I’ll admit I started off a hundred percent selfish. I was like, “how can I make $200 a month in cash flow?” There was nobody but me in that equation. Over time as you do it and start learning some things, and probably just general maturity, there’s a little bit more to this thing in life than just money, but it certainly does help.
What advice would you give other engineers that are just getting started?
I think there are maybe some fundamental principles: taking care of your health, reading, networking. The daily three things that will just give you enough energy, connection, and knowledge to be able to act.
But then the tangible piece is getting around other people that are actually doing it. It was a game-changer for me to see how others do it. Then I see: this is how people mitigate risks. This is how they do something because knowledge gets you so much. There is only so much you can get from reading a book. You need to meet people doing it.
There is only so much you can get from reading a book. You need to meet people doing it.
Then the second piece of advice, I would say is: try to get rejected. I think engineers can be so fearful that if they put an offer on a property, it doesn’t get accepted, then it’s bad. I was that way for a long time. If I put an offer, I want it to be fair to everybody.
But if you put an offer and get told “no,” you’re not out anything. Just get a thousand pitches and just swing at the one that you want. But why not keep lining them up? You only can go to the next level if they actually accept an offer on the home. There’s no cost to put an offers to homes except maybe just time.
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