The path to monetary freedom is a marathon, not a dash. It requires endurance, self-discipline, sacrifice, and a long-term mindset. Right now’s visitor, Logan Kohn, is on his technique to monetary freedom with over a million {dollars} of actual property with three properties at solely twenty-one years outdated!
Logan deliberate to spend money on actual property later in life, however COVID compelled him to rethink his timeline. Since rates of interest have been at an all-time low throughout the pandemic and his earnings took a success, Logan determined to expedite his investing journey. For his first funding property, he checked out his county, nevertheless it wasn’t reasonably priced, so he seemed on the subsequent county over. It wasn’t the very best space, however he noticed the chance for progress, and now his first property has already appreciated over thirty %!
Logan purchased his first property and his different two properties within the span of 1 12 months, which required excessive monetary self-discipline and frugality. Logan has been excited by rising his cash since he was a baby. From the age of ten to the tip of his teenage years, he began numerous facet hustles to generate profits. He’s executed magic on the road, dropshipping, internet affiliate marketing, and electronic mail advertising. At seventeen, he found shares and began stacking his cash and letting it develop. Now he invests his cash whereas having few bills to be as frugal as potential so he can multiply his wealth via actual property!
Ashley:
That is the Actual Property Rookie, episode 233.
Logan:
Yeah, I feel it was simply, I feel I noticed the chance. I type of seemed on the gross sales value historical past of that property and the encompassing properties in that space, and I noticed that they have been on an upward pattern, and naturally, we in all probability couldn’t have foreseen the appreciation that may’ve come within the 12 months following, however I feel I simply type of noticed the pattern and I noticed it was on the up and up, and I simply thought… Imagine it or not, it’s truly solely about 30, 40 minutes from The Hamptons. So, it’s a really black and white situation the place you have got such a nasty space and an excellent space very near it. So, I took the possibility. It was positively a danger.
Ashley:
My identify is Ashley Kehr and I’m right here with my cohost, Tony Robinson.
Tony:
And welcome to the Actual Property Rookie Podcast the place each week, twice every week, we provide the inspiration, motivation, and tales it’s good to hear to kickstart your investing journey, and I need to begin right this moment’s episode by shouting out a really particular listener who left us a five-star overview on Apple Podcast. This week’s overview comes from Jess Haas, and Jess says, “Begin right here,” with like 5 exclamation marks. “That is arms down the very best place to begin your actual property journey. From the minisodes on Saturdays to the visitors, all the pieces is pure gold.” Jess, we respect you. And for all of you listening, when you haven’t but left us an sincere score overview on Apple Podcast, please do. The extra opinions we get, the extra people we might help, and that’s our first and all the time greatest objective right here on the Actual Property Rookie. So, Ashley Kehr, what’s up? The way you doing right this moment?
Ashley:
Not a lot. Tremendous excited, right this moment I submitted my ultimate edits on my manuscript, so haven’t actually informed lots of people as a result of I didn’t know if I’d ever end it. However yeah, so popping out January 2023 goes to be a brand new ebook that I wrote.
Tony:
There you go. Congratulations. Ashley, podcast host, revealed creator, {and professional} hula hooper, all coming collectively.
Ashley:
And bull rider, don’t neglect that too.
Tony:
And bull rider. However now, severely, I’m tremendous pleased for you, Ashley.
Ashley:
Thanks very a lot.
Tony:
I’m excited to get my arms on the ebook, and the world’s going to adore it, I’m positive.
Ashley:
Yeah, thanks very a lot. What about you, Tony? What’s new? You bought your trip developing, very nicely deserved. And what else?
Tony:
We obtained trip, nevertheless it’s all the time bizarre earlier than trip since you’re scrambling to get all the pieces executed. So, Ash and I have been speaking earlier than we began recording how we each pulled all-nighters final evening. It’s like we’re in faculty or one thing, once more, making an attempt to check for a ultimate. However yeah, we’re simply shifting alongside. We onboarded a brand new assistant, so she type of began final month, however this week was her first full week working with us. If you first rent a brand new crew member, it virtually, there’s extra work initially simply getting them educated up and finally they’ll type of be off and working. So, we’ve simply been a little bit in all places this week.
Ashley:
Nicely, we’ve an excellent episode for you guys right this moment. The very first thing is Tony as soon as once more finds a cause to speak about his Streetfort, Treefort, no matter, I nonetheless don’t even know what the precise identify of the town is in Louisiana, and we truly type of go right into a rabbit gap about insurance coverage on this episode. However I feel it’s positively price listening, particularly after we’re listening to the affect of what has occurred from Hurricane Ian down in Florida and simply how your insurance coverage can change and belongings you guys ought to pay attention to and know as an investor to your properties, issues to concentrate on. However we’ve Logan on the present right this moment. So, he’s solely 21 years outdated, and he’s so cool. I imply, simply listening to all of the issues he’s executed already on the age of 21, I feel it’s actually outstanding.
Tony:
Yeah, Logan’s going to show you find out how to not simply do that anyplace, however how to do that in an costly market. He’s going to indicate you how one can purchase properties with no W2 job, no tax returns, and no automotive. And so, this child’s unimaginable, man, and I feel no matter what age you might be, you’ll actually get impressed and motivated by listening to his story.
Ashley:
Yeah. So, earlier than we carry Logan onto the present, we’d love for you guys to hitch the Actual Property Rookie Fb group. We have now over 50,000 members within the group proper now, and it’s an excellent place to get your questions requested, to share your wins, but additionally to assist different individuals and reply some questions too. So, be sure to be part of the Fb group when you guys haven’t already, and naturally, subscribe to our YouTube channel so that you simply guys can watch the Actual Property Rookie Podcast and likewise see-
Tony:
See these lovely faces.
Ashley:
Yeah, I feel the tiredness of the all-nighters. I imply, that’s the second joke that you simply pulled right this moment, Tony. However you guys might additionally get to observe our superior contributors on the true property rookie YouTube channel too.
Tony:
Logan, welcome to the Actual Property Rookie Podcast, brother. We’re excited to have you ever, man. Earlier than we get into the nitty-gritty, why don’t you inform us a little bit bit about who you might be and the way you bought began in actual property funding?
Logan:
Yeah. So, I feel I used to be bit by the cash entrepreneur bug fairly early on, I’d say, in all probability earlier than I even reached the age of 10, 11, 12. So far as the true property, that was one thing that I didn’t suppose was going to occur this quickly and early in my life. I actually thought that was going to return a lot later down the street, perhaps 5, 10 years from now. It was actually the pandemic that was type of the impetus, the motivation to leap proper into actual property. I had been learning it for a couple of years, studying books, watching BiggerPockets, programs, movies, however I took a giant hit with my earnings primarily as a result of pandemic, and that positively put a dent in me, and I noticed that rates of interest have been at an all-time low. I assumed now was an opportune time, and I simply determined to leap proper in, and now I’m right here with $1.1 million price of actual property and rising and rising much more.
Ashley:
And the way outdated are you?
Logan:
I’ll be turning 22 subsequent month.
Ashley:
Oh my gosh. Congratulations, Logan.
Logan:
That’s wonderful, man.
Ashley:
That’s so cool. So, once you determined, you’re taking a look at, okay, rates of interest are low, all the pieces like that, was it like, “I’m simply going to purchase a home to reside in,” or did you already know like, “I need to do an funding property”?
Logan:
It was positively going to be an funding property, however I had no concept the place to begin. There have been so many looming fears and the unknown. Possibly I assumed I’d begin with business, like a storefront. Possibly I’d purchase one thing a pair blocks away from me and simply put all the cash I had into it. I actually didn’t know the place I used to be going to begin. However primarily for me, I reside on lengthy island in Nassau county and clearly Lengthy Island is likely one of the costliest markets within the nation, and so, I noticed there was a possibility within the county subsequent to mine about an hour, hour and a half away, and I noticed that costs have been a lot decrease there, primarily as a result of it’s not the very best space, it has a nasty repute, and so, that’s the place I began. I began in that particular metropolis, and that was my first single household residence as my first property.
Ashley:
Logan, earlier than we go any additional, what does your portfolio type of appear to be proper now?
Logan:
So, it consists of a duplex that’s native close to me, simply 10 minutes away, after which the 2 single households are in that space about an hour and a half away from me. So, 4 items whole, three properties.
Ashley:
Okay. Let’s simply, let’s return to the start a little bit bit. So, you have been an entrepreneur. Inform us a little bit bit about your first enterprise earlier than you even obtained into actual property. Then we are able to go into as to what abilities truly transferred over for you?
Logan:
Yeah. So, for me-
Ashley:
And when did you begin a enterprise? If you happen to’re 21, when did you begin your first enterprise?
Tony:
Yeah, can we speak a little bit bit? Ash, what have been you doing at 21?
Ashley:
I had simply transferred faculties. Yeah, I imply, I positively wasn’t working a enterprise. I used to be interning as an accountant, I assume, whereas I used to be going to school.
Tony:
Yeah. Yeah, I feel my twenty first 12 months, I feel that’s after I virtually flunked out of school. I modified my majors midway via that 12 months, and I nonetheless had aspiring goals of being a hip hop artist. So, positively not doing all of the cool stuff you’re doing, Logan.
Logan:
It’s [inaudible 00:07:45].
Tony:
Yeah, perhaps at some point. Yeah.
Logan:
Nicely, for me, I truly didn’t go to school, however so far as the primary cash I ever made, I’m truly a magician. So, that’s actually the place I’d say my cash journey began was doing magic truly. As early as 9, 10 years outdated, I’d do magic on the road and make a couple of {dollars}. I bear in mind a $20 tip being the world on the time, and I’d do gigs. I began approaching eating places, and that was type of my first introduction to cash, however clearly not having the literacy or understanding to do with that cash or budgeting it or managing it, that got here a little bit bit later. However then I began entering into on-line enterprise. I noticed it was potential simply naturally via the web. So, I began doing drop transport, internet affiliate marketing, electronic mail advertising, and different numerous kinds, simply promoting objects I had across the family. So far as making an attempt to take a position my cash and truly develop it, I’d say it actually began with playing. I attempted playing with horse racing, yeah.
Ashley:
You don’t hear that fairly often.
Logan:
No, I do know. That’s the place it began actually for me. I attempted to get wealthy fast too many occasions, however long-term investing got here in all probability after I was like 17, 18 years outdated. I made a decision to begin investing in shares and have that long-term mindset.
Tony:
Logan, do you have got household or a mentor or somebody that type of guided you in direction of actual property? The place do you suppose this preliminary curiosity got here from?
Logan:
So far as actual property itself, nobody in my household has ever executed actual property, not even anybody distant. It’s by no means been within the household. The closest that I’ve ever gotten to cash and managing and truly making an attempt to do one thing with cash was in all probability my father. Sadly, he handed away final 12 months, however he tried many issues on-line similar to myself, and I don’t suppose he fairly obtained something to essentially work in his lifetime, however I feel that bug positively bit me and doubtless was handed on to me via him.
Tony:
Yeah. Nicely, I’m sorry to listen to about your father, however I assume we are able to tick solace to understanding that a few of these classes that he handed onto you might be bearing fruit, man, so there’s all the time a silver lining there. So, you talked concerning the magician work earlier in your life and also you’re nonetheless doing that right this moment, the type of digital advertising expertise that you simply had. To Ashley’s query earlier, have any of these abilities from these earlier companies translated into the world of actual property investing?
Logan:
I’d say that I’ve positively made errors in each areas, actual property and on-line enterprise in itself. I’d in all probability say that having that long-term mindset, after I first began to construct my enterprise, I in all probability tried too some ways to construct it too shortly or tried to throw cash in areas that in all probability weren’t essentially worthwhile. I feel that type of does translate into actual property, having that long-term mindset and searching a few years down the street, and likewise probably shifting and managing your cash in sure areas which are positively extra needed and extra of a constructive return on funding than different methods to place your cash right into a property.
Tony:
Can we contact a little bit bit, Logan, on the way you’ve been capable of afford over 1,000,000 {dollars} price of actual property? At any age, it’s an achievement, however I feel particularly at 21, virtually 22 years outdated. What did that course of appear to be? Was this your life financial savings? Have been you working with different buyers? Simply type of stroll us via how somebody is ready to buy 4 items in such a brief time period.
Logan:
So, yeah, the items, that was bought in underneath one 12 months. So, the precise buying was positively fairly expedited. However so far as the precise constructing of the cash itself, that got here principally from simply stacking away my cash and hoarding that cash. Each single 12 months, I actually tried to be as frugal as potential. Slightly expenditures right here and there, little splurges, however I actually was fairly disciplined with investing my cash and placing all of it into shares. I simply put each nickel I had, attempt to throw it away, and actually hold as little money as potential. That was actually going to be the plan earlier than actual property was simply going to be placing my cash in shares or in subsequent funds, and perhaps by the point I attain 40, 50 years outdated, I’ll have seven, eight figures price saved up, and actual property in all probability wouldn’t have come for a really very long time down the street.
However yeah, it was all via simply being disciplined with investing and paying your self first and conserving low bank card debt, open that first bank card quickly after I turned 18. So, that positively helped. However it was all simply primarily via on-line enterprise and life financial savings.
Ashley:
Logan, as a teen incomes this cash, how have been you disciplined to not go and spend it? So, after I was a teen, I labored as a waitress and a hostess, and I bear in mind I’d go dwelling with my wad of money from my ideas and I’d depend out my cash and I’d put it in my save. Then after I went to school, I actually blew via all that cash in all probability within the first semester. How have been you capable of keep disciplined to not simply exit and spend that cash?
Logan:
Yeah. No, I positively have a couple of pals that very same story as you, however I’d in all probability say that I feel I screwed up so many occasions early on, and I spotted that I needed to make that change and truly attain monetary freedom, and I knew what it was going to take. And so, I feel I had that mindset fairly early on and I feel I type of had that epiphany that so as to make this work and so as to create the approach to life that I actually needed, it wasn’t going to occur via spending and losing your cash and having little leftover after each month. So, I feel the dream and having that objective positively helped in that, and I discovered that very early on. I don’t suppose it was luck. I feel it was simply in all probability perhaps simply my affect and who was round me and doubtless simply what I discovered, simply studying a lot at such a younger age. I’ve been studying books and watching so many programs and et cetera for a really very long time.
Ashley:
On the BiggerPockets convention this 12 months, I felt like I heard so many individuals say the identical factor, that if you wish to actually excel at life, if you wish to take it to the following stage, if you wish to achieve success, it’s good to change the people who find themselves in the identical room as you. You don’t need to be hanging out with people who find themselves going out partying as an alternative of eager to plan a enterprise or issues like that. You need to hold your folks round you which are doing the identical factor as you and even larger and better than you, and I feel that’s type of what you’re pertaining to there may be that you simply surrounded your self with the precise individuals to get your mindset proper and to push you and to attain you as a result of being round individuals is contagious. You’re going to get caught into what they’re doing, You’re going to lose concentrate on what you really need simply since you’re interacting with different people who don’t have that very same dedication, that very same focus to succeed in and get to the following stage.
We had Tempo Morby on an episode and that needs to be popping out quickly, and he talks about this too as to how he truly needed to clear home on his circle of pals, and he’s like, “Yeah, that’s a tough factor to do, however I used to be actually being held again.” So, I feel that’s actually superior that at an early age you surrounded your self with individuals who have been an excellent affect on you and who truly helped push you to type of get to the place you might be right this moment.
Tony:
Can I add to that, Ash, earlier than we transfer on? I’m so glad you introduced that up as a result of I feel at any level in your life, your social circle is so essential, particularly when you’re a more recent investor as a result of even outdoors of simply the assist, the motivation, one of many belongings you get out of your social circle is a brand new perception system, and I feel that’s an element that lots of people overlook.
If you happen to’ve by no means made 100 thousand {dollars} in a single 12 months earlier than, once you begin hanging round individuals who have made six figures, you one way or the other imagine that it’s potential. If you happen to’ve by no means change into a millionaire earlier than, you begin hanging round with different millionaires, now you out of the blue imagine that’s potential. When you have pals which have yachts, proper, or non-public jets, you begin hanging round with them, now you suppose that that’s potential. So, it’s like even outdoors of the assist and the social side of it, I feel once you encompass your self with people who find themselves on the identical path as you or have achieved the belongings you need to obtain, one of many greatest advantages you get from that’s simply the idea system you can truly comply with in these footsteps.
Ashley:
Logan, so with this pile of money that you’ve shoved underneath your mattress at a younger age, did you employ this for a down fee? How did you buy that first property? Was all of it money? How did you’re employed that deal?
Logan:
Yeah, in order that was all simply accrued in brokerage accounts, simply sitting there rising on a month-to-month annual foundation. So far as the true property, that first deal, I wasn’t essentially uncovered to various kinds of financing particularly like a tough cash or DSCR sort of mortgage, or even when I used to be uncovered to it, I in all probability wouldn’t have executed it. I in all probability would’ve been too fearful to do it. So, I simply began with a primary typical mortgage, Fannie Mae, Freddie Mac, however the factor was is that I used to be nonetheless being claimed as a depending on my dad and mom’ tax returns so I didn’t essentially have any tax returns. So, I truly needed to exit and file two years price of tax returns, which as , New York State, a few of the highest earnings tax within the nation, so as to qualify and present ample earnings on paper to qualify for that typical mortgage. So, it was additionally the buildup of tons of charges and penalties for paying late and all the pieces like that.
Ashley:
So, you went again truly and took your… So, your dad and mom, did they amend their tax return to now not have you ever as a dependent and you then went and filed for 2 years prior?
Logan:
They didn’t essentially amend theirs. It was simply my very own Schedule C self-employed earnings, and that was a hefty hit, in all probability like 40, $50,000 price of taxes. However in hindsight, perhaps I’d’ve proven a little bit bit much less earnings and simply did a DSCR mortgage, perhaps I wouldn’t have proven that a lot earnings on paper. So, yeah, that was first deal, a standard mortgage, 20% down for that single household home.
Ashley:
Cool. That’s attention-grabbing. I by no means considered being at an younger age, not having that earnings. So, what earnings did you present on there? Your earnings as being a magician? Did you pull cash out of the inventory market that hadn’t been reported that you simply’re reporting now?
Logan:
So, I’d in all probability say it was magic earnings, it was additionally on-line enterprise earnings, internet affiliate marketing, all that, and I don’t suppose essentially capital achieve confirmed on that tax return simply but as a result of the cash was pulled out after. However yeah, in order that was all of the earnings that was proven on there. It was a giant hit, however I feel in hindsight it positively was an excellent choice as a result of I obtained two typical mortgages and I’d get one other typical mortgage out of it.
Ashley:
Superior. So, you probably did the 20% down. What did your phrases appear to be in that? You had stated you observed rates of interest have been low, so did you get in at an excellent time?
Logan:
Yep, that was a great way. I’d do something to get that price again. It’s solely three and 1 / 4, imagine it or not, on that first mortgage. That was final 12 months and I closed on that property June of 2021. I locked in that price in all probability a couple of months earlier than, and so, do something to get that price again. And likewise, so far as the property itself, the value of that property was solely 213,000 which on the time I assumed it was overpaying for it.And particularly in that space which doesn’t essentially have the very best repute. It’s thought of the armpit of Lengthy Island. On the time I assumed I used to be overpaying for it, and when you requested different buyers within the space, they in all probability wouldn’t have even touched that space.
Ashley:
Go forward. Identify names. What’s the identify of it? What’s the [inaudible 00:18:58]?
Logan:
So, it’s Mastic-Shirley space, Mastic Seashore. It’s thought of the dump of Lengthy Island, nevertheless it positively is rising and appreciating at a excessive price proper now.
Ashley:
How did you type of work up the braveness to spend money on an space that has a nasty repute? I really feel like most buyers need to go to an excellent space the place there’s appreciation and tenants.
Logan:
Yeah, I feel it was simply, I feel noticed the chance. I type of seemed on the gross sales value historical past of that property and the encompassing properties in that space, and I noticed that they have been on an upward pattern, and naturally, we in all probability couldn’t have foreseen the appreciation that may’ve come within the 12 months following, however I feel I simply type of noticed the pattern and I noticed it was on the up and up, and I simply thought… Imagine it or not, it’s truly solely about 30, 40 minutes from The Hamptons. So, it’s a really black and white situation the place you have got such a nasty space and an excellent space very near it. So, I took the possibility. It was positively a danger.
So far as, by the best way, on the earnings, I’ve dispelled a pair notions thus far, primary that when you’re my age, you possibly can’t spend money on actual property. After which additionally when you didn’t go to school, you possibly can’t spend money on actual property. If you happen to’re residing on Lengthy Island, you possibly can’t spend money on actual property. If you happen to don’t have any W2 earnings, you possibly can’t spend money on actual property. So, I’ve type of damaged all these obstacles.
Tony:
Logan, I need to ask a query as a result of you have got these 4 items proper now, are you residing in any of your investments or are you continue to residing at dwelling with the oldsters? What’s the residing state of affairs appear to be proper now?
Logan:
Yeah, nonetheless residing in the identical condominium with my mom. We lease, we don’t personal. I personal all the pieces else although.
Tony:
That’s such a singular factor. I’m glad I requested this query since you clearly have the monetary capability to exit and buy property, however as an alternative of doing it to your major residence, you’re doing it to construct a portfolio. And I’m seeing this theme all through the dialog, Logan, the place you’re capable of train endurance and self-discipline to maneuver in direction of your targets, and I feel that’s one thing that lots of people wrestle with, and folks have the perhaps monetary capability, they’ve the psychological capability, they’ve the technical know-how to change into actual property buyers, however what they lack is the endurance and the self-discipline to keep it up and execute and do the issues they should do.
You’re staying at dwelling along with your mother when you’re nonetheless constructing this actual property portfolio. You might be tremendous frugal with all this cash you’re making at a really younger age which most individuals can’t do. There are simply all these items that you simply’re doing that present how disciplined and dedicated you might be to your targets. So, if there’s one thing for our rookie viewers to remove, it’s that if you wish to achieve success, there must be a sure stage of sacrifice. It’s important to quit one thing if you’d like that greater reward down the street, and I feel you’ve simply executed an excellent job, Logan, of exemplifying that.
Logan:
I respect that. Particularly children my age and my technology, I feel I’m type of going towards the grain so far as what I’m investing in as a result of I’d think about that the majority of my technology is clearly enjoying round with cryptocurrency and the following sizzling factor, and so, I might have simply executed that. Clearly I disclose that I do personal a little bit little bit of cryptocurrency, however is certainly not nearly all of my portfolio.
Ashley:
Logan, once you say your technology, you imply our technology.
Logan:
Gen Z, Gen Z. Yeah, yeah, after all.
Ashley:
So, Logan, what do your bills and your payments appear to be for your self? So, you’re residing at dwelling. Do you assist your mother? Do you pay a portion of the lease? Do you have got a automotive fee? Are you paying insurance coverage? What sort of month-to-month bills do you have got, and what have you ever determined to chop out of your life to reside so frugally to have the ability to make investments extra?
Logan:
Not an excessive amount of moreover the lease. So, I truly don’t even drive both. So, that’s one other notion dispelled there that when you don’t have a automotive, you possibly can’t entry actual property. So, I normally simply get a journey from my agent or through an Uber or no matter. However yeah, so I truly pay 100% of the lease right here and clearly very costly market on Lengthy Island which is hard, however I make it work. Sadly, my mother, utterly totally different state of affairs, totally different situation. She didn’t essentially comply with the identical path or the footsteps as I’m doing proper now, and so, I’m truly paying 100% of the lease. She helps out a little bit bit with utilities, however aside from that, no automotive fee, no scholar loans, no debt like that.
Ashley:
Logan, how superior is that that you simply get to try this to your mother?
Logan:
Admire that.
Ashley:
I feel that’s, and actually happy with you that you simply need to do this too for her. I imply, not many individuals at your age and even at any age might help their dad and mom out in that sense. So, I feel that’s actually wonderful that you simply’re doing that and that’s the way you’re selecting to spend the cash. Actually, that’s your solely expense that you’ve. So, yeah, that’s actually superior and that’s an enormous factor. So, congratulations on with the ability to do this. That’s positively an enormous accomplishment.
Tony:
If I can ask one comply with up query, Logan, you talked about that once you go go to a few of these properties you both catch an Uber or you have got your agent choose you up. It made me suppose like okay, yeah, you’re working with an agent and as a youthful investor, how did you type of construct that relationship along with your brokers in order that they took you severely? I feel plenty of new buyers, no matter age, wrestle with this imposter syndrome round like, “Oh man, will this agent actually take me severely or will this contractor take me severely, or this property administration firm?” So, what was your strategy to constructing an excellent relationship and getting that particular person, as a 21, 20 years outdated perhaps on the time, truly them take the time to indicate you round and choose you up and do all these items?
Logan:
So, fortunately, I haven’t run into anybody that’s essentially disowned me or something like that. So, fortunately fairly good relationships throughout. I haven’t had anybody doubt me, and the agent lives native, in order that’s not essentially one thing that took an excessive amount of convincing, they have been pleased to do it. However I’ve positively gotten some eyeballs and a few stunned appears and faces after I present as much as that closing desk and so they see who’s closing on that property, or the insurance coverage agent, perhaps they see my birthdate or one thing and so they positively make a touch upon my age. So, I’ve positively gotten these.
Tony:
What about your tenants, Logan? Are you self-managing? Do you have got a relationship with them and what does that dynamic appear to be?
Logan:
Yeah, so all self-managed proper now. I don’t know, perhaps after I hit 10 items I’ll in all probability transfer to a property supervisor. I can’t fairly make the choice but. I’ll see how a lot I can deal with. However a couple of totally different tales so far as the tenants as a result of on the primary property I technically inherited that tenant, in order that has a narrative there, after which the second property I did inherit a tenant for that duplex, so we positively get into that as nicely.
Tony:
Let’s hear the tales, man.
Ashley:
Yeah.
Logan:
The primary property truly I’d say I obtained fairly fortunate. Attention-grabbing story, imagine it or not, the proprietor that bought it to me truly needed to remain and reside at that property. I feel they’d some type of residing association arrange that they have been going to be shifting out in six months or a 12 months, and so they simply needed to lease the property from me truly till they transfer out. Nonetheless, they haven’t moved out and it’s been a 12 months and a half, and we’re truly going to resume that lease subsequent month, however I should increase the lease, and so, we’ll see what occurs there in the event that they select to resume or not. However yeah, so I did get fairly fortunate there. That was fairly turnkey with the tenant arrange, and I didn’t get to display them, however fortunately they’re simply closing that property, and so, they did have a boatload of funds from promoting it to me. So, I assume that was type of a pre-screen. So, that’s the primary one.
The second, the duplex, one of many items was occupied, the opposite one vacant. So, I did inherit a tenant there, and that was positively a dangerous tenant as a result of I don’t even suppose they’re technically documented, so I don’t even suppose they have been capable of present a social safety quantity so I didn’t get to display them. So, I’ve taken plenty of danger throughout between the tenants not being screened, after which additionally all these properties are in flood zones, in order that’s positively a danger as nicely. So, I’ve positively taken on some dangerous conditions.
Ashley:
Logan, how did you present the vacant unit? Did you arrange one exhibiting so that you solely needed to get a journey there as soon as? I determine and not using a automotive it could be considerably troublesome to go there on a regular basis to do exhibiting. So, how when you arrange your leasing course of so that you simply don’t have to really be on the property on a regular basis?
Logan:
I simply went via my dealer in order that they present the property, however on that duplex truly, particularly, that one is simply 10 minutes away from me so it in all probability wouldn’t have been a giant deal in any case to indicate it. The prepare goes proper there. However on the third one, that I purchased vacant, that third home, in order that was an hour and a half away from me as a result of it’s in that very same Mastic space. And once more, my dealer simply confirmed that one and now it’s occupied. We obtained it occupied inside a pair weeks.
Ashley:
What was the price that you simply paid your dealer to try this? As a result of I had that earlier than and I feel it was one month’s lease that we truly paid the agent as soon as they obtained a tenant in there.
Logan:
Yeah, it was simply the one month’s lease that the tenant pays. I’ll say for New York they’ve some fairly strict legal guidelines with regard to how a lot you can cost so far as one month’s lease upfront safety. So, in New York, it’s positively a tricky market with the legal guidelines and rules.
Ashley:
No I meant to the dealer, the true property agent. Did you pay them as soon as they obtained a tenant in place? Did you pay them?
Logan:
Didn’t come out of my pocket. It was from the tenant. Yeah, they paid the dealer one month upfront the one month brokerage price.
Ashley:
Oh, the tenant paid. Okay.
Logan:
Yeah, nothing out of my pocket.
Ashley:
Oh, attention-grabbing, oh.
Tony:
Oh, that’s cool.
Ashley:
Yeah, I’ve solely seen on the opposite facet the place the precise landlord pays the dealer however to have the tenant pay.
Tony:
Breaking extra guidelines, Logan, I adore it, man.
Logan:
Okay. I didn’t know that truly.
Ashley:
However sure, what you stated too may be very true in New York State the place you possibly can solely cost one month’s lease for safety deposit or much less. You’ll be able to’t cost greater than that and you can also cost final month’s lease. And I truly had any person textual content me the opposite day asking me this as a result of their daughter was making an attempt to get a unit and the owner informed them like, “You’re going to should put the next safety deposit down,” and so they have been considering, “I don’t suppose you’re true.” So, after all, I get on, I get all the federal government paperwork, I ship it to them, like, “They will’t do this to you.”
Logan:
And likewise with regard to Part 8, there’s additionally rules with that. I don’t know if it’s the identical in all states, however in New York, it’s technically unlawful to take over the voucher quantity. So, that’s additionally authorized, and I had some Part 8 individuals attempt to apply for that third property.
Ashley:
So, how are you discovering out all of this info? What are some nice sources that any person who’s entering into property administration can go and discover all the pieces that you simply’ve discovered?
Logan:
Fb teams are nice. I be taught plenty of info from the Actual Property Rookie group and the larger, the BRRRR Make investments group, a lot of teams with regard to actual property on Fb, after which naturally there’s additionally native meetups which I’m positive are nice for individuals as nicely. There’s a couple of on Lengthy Island after which additionally simply naturally YouTube College, proper, this Google College, countless analysis. However the massive factor is you can achieve all this data, do your whole evaluation, and have all this info, nevertheless it’s till you truly do it and execute that a few of these unknowns and fears received’t go away.
Tony:
BiggerPockets, BiggerPockets, BiggerPockets.
Ashley:
Tony, did you simply crack a joke?
Tony:
I’m joking however I’m additionally severe, proper? I feel for thus many new buyers, the boards on BiggerPockets, it’s like an encyclopedia of… It’s a PhD of actual property investing. Virtually any query you can take into consideration asking has in all probability already been requested and somebody has answered it in very excessive particulars someplace on the boards, and actually I feel that’s how I initially discovered BiggerPockets. It’s like I googled some tremendous obscure actual property one thing after which I landed on one of many pages within the boards after which that type of despatched me down the rabbit gap. So, I really like all of the sources you talked about. Look, however clearly simply needed to plug the boards trigger I feel it’s an excellent useful resource for brand new buyers.
Logan:
Completely.
Ashley:
So, Logan, do you have got a deal that you simply type of need to undergo the numbers with us?
Logan:
Certain factor. I feel we might begin with that first one as a result of it’s positively the biggest so far as money circulate and the return on funding, so I feel we might positively dig in with that. My first deal, that was 20% down, single household unit, fairly a small two bed room home. I feel it’s lower than a thousand sq. ft, however once more, 213,000, on the time I assumed I used to be overpaying for it. That was after-
Ashley:
What was that? Is that the asking value?
Logan:
It was 224 or 5, we obtained it right down to 215, then a $2,000 credit score, 213 was the ultimate value, and that 20% down, so all in, I feel it was like 65, 70 grand all in with closing prices. It was fairly turnkey. I changed a water heater and a few minor TLC however nothing too massive. I can’t essentially communicate for everybody, however I’d say particularly for somebody like myself who’s not essentially majorly astute with helpful work and contracting, I’d in all probability begin with turnkey properties. I in all probability wouldn’t start with a significant rehab venture. That’s simply my opinion, however everybody’s totally different. So, turnkey property, and like I stated with that state of affairs, the tenant, that was just about constructed into it, the proprietor, and I obtained it rented immediately. It was occupied day one at closing and now it has appreciated like 30, 40% simply within the final 12 months, 12 months and a half due to what’s happening available in the market there.
Ashley:
Wow. And what does the tenant pay for lease in that property?
Logan:
Proper now, 2,200, however that’s means under market worth truly.
Ashley:
And that’s the one the place it’s the homeowners residing in there?
Logan:
Appropriate.
Tony:
Sorry, $2,200 monthly on a $213,000 home?
Logan:
That’s proper. However that’s means under market worth, yeah.
Tony:
Wow, that’s wonderful.
Ashley:
So, you place about $75,000.
Logan:
Yeah, about 70 grand all in with closing prices and the down fee.
Ashley:
Tony, what’s the money on money return on that?
Tony:
Yeah, what are you netting on that 22?
Logan:
Yeah, insurance coverage went up as a result of the flood insurance coverage is so excessive, particularly in that space as a result of it’s such a dangerous flood zone. That’s the one caveat, nevertheless it’s about 600 bucks in money circulate a month. So, that’s an excellent deal. I’d do something to get that deal repeatedly. I’d do it every single day of the week however the market has gone up a lot and clearly rates of interest on high of that, simply not possible anymore. However the proportion return is about 12, 13% truly, the proportion.
Tony:
Yeah, that’s superior, man. That’s an excellent first deal. I’m tremendous impressed that you simply’re capable of get such a excessive month-to-month lease quantity on comparatively talking low buy value. That’s nice, man.
Ashley:
However you must take into consideration too that the properties in New York State the place the property taxes are quite a bit larger. So, it’s very simple to hit the 1% rule the place the lease is 1% of the acquisition value and even larger than the 1% rule, nevertheless it’s very onerous to fulfill the 50% rule the place your bills are 50% of the month-to-month rental earnings. So, that’s a giant factor to suppose too is these property taxes kill you.
Tony:
The flood insurance coverage is a giant danger too. So, I don’t know when you’ve heard my story, Logan, however I additionally purchased my second funding property was in a flood zone, and the primary 12 months we owned the property, the flood insurance coverage premium was tremendous affordable. The second 12 months we owned the property, the flood insurance coverage premium quadrupled, so it was like a thousand bucks a 12 months and it went as much as 4,000 bucks a 12 months, and we shopped it round to a number of totally different insurance coverage brokers, all of them got here again with very related quotes. I don’t know what occurred. I don’t know if there… Mercury should have been in retrograde or one thing as a result of there was some bizarre stuff occurring throughout the insurance coverage business, however that killed us on that deal. We ended up promoting it at a loss truly. So, there may be some danger with that. I’m not making an attempt to scare you.
Logan:
No, on my second property that truly simply occurred the place a couple of months in the past I obtained the renewal discover, and it was double what I used to be paying simply months earlier than, and so, I needed to store it round and obtained a little bit bit higher of a price. However yeah, it’s positively gone up.
Tony:
I discovered quite a bit about flood insurance coverage as we have been going via that. There’s a technique to problem the flood insurance coverage or I assume the flood zone designation. It’s a very prolonged course of, and we simply didn’t really feel like going via it, however when you speak to your insurance coverage agent, there’s a technique to problem that flood zone designation when you can show there hasn’t been any main floods or one thing like that, or there’s like a map you must pull from the FEMA web site. However there’s a course of. It’s simply, it’s fairly prolonged and the possibilities of success are actually slim. So one thing to look into when you’ve obtained the time.
Ashley:
Yeah, I simply obtained considered one of my payments yesterday truly that there’s one property that’s in a flood zone. I even have it underneath contract to promote it proper now, nevertheless it went up $400 for the 12 months. It went from 1,400 to 1,800.
Logan:
Particularly Lengthy Island obtained hit very badly by Hurricane Sandy in 2012. Every part was completely devastated. So, we’re positively in a nasty dangerous flood space.
Ashley:
Yeah, I did two of my bootcamp calls this week, and in each of them the dialog got here up as to how Hurricane Ian is altering Florida for insurance coverage and the way the premiums are simply going to extend much more and simply there’s a cap on how a lot it may possibly truly enhance. However it was actually attention-grabbing listening to a few buyers who spend money on Florida speak about how that’s going to affect them after which additionally people who find themselves householders too, and it’s not simply funding property. So, insurance coverage is certainly a…
Tony:
Difficult.
Ashley:
Yeah.
Tony:
Yeah.
Ashley:
I’ve my insurance coverage license and I hate it a lot. I don’t perceive half of it anymore as a result of I’m similar to don’t keep on high of it. It’s type of like a CPA, in the event that they don’t keep updated on the tax legal guidelines and rules [inaudible 00:36:23].
Logan:
However I’d say positively store round, store round totally different brokers and brokers and mess around with the protection and I feel you’ll get a greater price. That might simply be my recommendation, particularly to individuals in flood areas to buy round and I feel you’ll get a greater price than you initially obtained.
Ashley:
I feel that’s nice recommendation too, particularly mess around with the protection as to have a look at what you even have in your coverage. Is there one thing in there that you simply don’t suppose you’ll ever, ever use or ever come up even costing you 100 bucks further a 12 months for the premium? So, I feel that’s attention-grabbing, after which particularly with it being an funding property, take a look at what your protection is to switch the property, and I normally attempt to get it as low as a result of I truly may, if a duplex or one thing was to burn down, I don’t even truly know if I’d rebuild it or if I’d simply promote the lot or one thing like that too. So, the place if was my major residence, sure I’d should rebuild.
Tony:
That’s so humorous you talked about that, Ashley, as a result of Omi, my associate and I and Sara have been actually simply having this dialog about insurance coverage yesterday and we stated the other. It’s like our properties have appreciated a lot since we bought them that if considered one of them did burn down we’re undercover proper now. So Omi’s going to do the work to extend that alternative cowl so in the event that they do burn down, we’re not caught holding the bag. A buddy of ours, he was constructing a cabin within the Smokey Mountains. He was like two weeks away from it being accomplished. As soon as the property was going to be executed, he was going to have like $300,000 in fairness simply due to his construct price versus the place the properties have been appraising at. One of many employees flicked a cigarette butt that ended up catching some particles on hearth, burned down all the cabin, and his cowl, he was undercovered, so now as an alternative of getting $300,000 in fairness, he needed to write a $50,000 verify to cowl that building debt. So, once we heard that story we’re like, “Oh my god.” We obtained means too many properties to not be precisely coated.
Ashley:
And Tony, I feel you must examine properties too the place my $50,000 duplexes aren’t appreciating $300,000 in 4 years.
Tony:
That’s true, that’s true, that’s true.
Ashley:
My $3,000 appreciation can deal with that.
Tony:
You possibly can in all probability write that verify. You possibly can in all probability Write that verify.
Ashley:
But additionally for me to have to write down a verify, it’s like I all the time ensure that I at the very least have protection for greater than what the mortgage is, and that’s just like the precedence to me is that if it did burn down that I might repay the mortgage on the property simply.
Tony:
A very good dialog about insurance coverage. Let’s go to the rookie request line, Logan. So, for all our rookies, when you’re listening, you guys can go away us a voicemail at any time, simply give us a name at 8885-ROOKIE to go away a voicemail. We love getting the voicemails, guys. We love the Fb questions and we love the Instagram DMs however the rookie voicemails are cool as a result of we truly get to listen to you guys. So, if you’d like your voice featured on the Actual Property Rookie Podcast, give us a name, 8885-ROOKIE. So. Logan, are you prepared for right this moment’s query?
Logan:
I feel so.
Reid:
Hey guys, that is Reid from Brandon, Mississippi. When my spouse and I moved out of our earlier dwelling, we saved it as a rental and are at present trying to buy our subsequent rental unit. The primary home was already in our names and we left it that means. Transferring ahead, at what level will we need to begin placing houses underneath a LLC, or ought to we in any respect? Does the safety supplied offset no matter ache there could also be to buying a house underneath a LLC? So, simply curious if and once we ought to transfer to a LLC. Loving the content material. Sustain the nice work.
Logan:
So, so far as my data, an LLC doesn’t essentially stop you from getting sued, proper? There’s nonetheless legal responsibility available there, however actually, I feel a common rule of thumb, simply from my evaluation and what I’ve discovered, I feel when you attain that variety of 10, I feel it’s best to get thinking about an LLC, could also be 20 items, however I feel for me particularly, and I don’t know what the property worth is on his property are and how much points he’s coping with, if it’s perhaps it’s a excessive crime space, each circumstance can be totally different. Not an lawyer, however I feel in all probability magic variety of 10, 10 items.
Ashley:
Yeah. I feel what you stated there concerning the fairness within the property too as a result of an LLC is to guard your belongings in order that if you’re sued, they will’t go after your private belongings. So, actually trying on the web price that you simply’re placing and the fairness that you simply’re placing in every LLC. So, if I’ve two properties in an LLC however they’re each mortgaged to the hill and there’s solely $10,000 in fairness, any person sues me, yeah, my insurance coverage will pay out, however there’s solely 10% of the fairness in there and say that’s solely $10,000, no matter.
But when I’ve half 1,000,000 {dollars} of fairness of properties in there, and perhaps that’s just one property the place I’ve half 1,000,000 {dollars} in fairness, I’m in all probability solely going to place that one property in an LLC. But when I’ve a bunch of little properties, these 10 and so they don’t have a ton of fairness in every of them, then yeah, I’ll throw these into one LLC. So, I feel trying that, similar to what you stated, however including in that element of how a lot do you need to danger placing into one LLC collectively. Okay, so, Logan, we’re going to transfer on to our rookie examination.
Logan:
Alrighty.
Ashley:
First query is, what’s one actionable factor rookies ought to do after listening to this episode?
Logan:
So, the best factor I’d positively say is to begin analyzing offers on-line and begin actually getting a concrete understanding of your market. You don’t essentially should look out of state. At first, I in all probability contemplate doing one thing in New Jersey or Connecticut or Pennsylvania as a result of perhaps I can get a a lot better deal there. However simply begin analyzing your native market and seeing how shut you will get, and definitely begin enjoying round these numbers, see what the money on money return appears like, see what you will get for rents, and simply type of do a market evaluation, a market sweep of the realm. I feel that’s one thing anybody might do proper now.
Tony:
Nice reply, Logan. Subsequent query, what’s one software, app, software program system that you simply use in your corporation right this moment?
Logan:
I’m truly not a lot of a spreadsheet techy man. It’s principally simply all the pieces’s simply on paper or within the thoughts. I truly don’t use too many apps or softwares. However so far as data and studying, such as you talked about, BiggerPockets discussion board is certainly one thing all over the place everybody can use.
Tony:
I really like that, man. See, I’m so the other. My mind, I would like, I would like a lot of construction and issues documented and regimented, whereas my spouse, she’s the other the place all the pieces simply type of swirling round in her mind, however that offers me nervousness. So, we’re yin and yang like that.
Ashley:
Logan, the place do you propose on being in 5 years?
Logan:
So, I feel I positively need to experiment with bigger complexes and 1031 exchanging into longer, bigger condominium buildings, hopefully entering into business actual property, so five-plus items. That’s actually going to be robust on this space, however I feel I could make it occur, and simply mainly doing all the pieces I’m doing proper now at scale. Whether or not it’s in enterprise, whether or not it’s my YouTube channel and doing content material branding and actual property, simply all the pieces hopefully at a bigger scale and precisely what I’m doing proper now although.
Tony:
Superior. Nicely nice job, Logan, man, and I’m excited to see that journey take off, man, and the best way you’re crushing it, I’m positive you’ll attain all these targets you’ve obtained. So, earlier than we shut out right this moment, I simply need to give a fast shout out to our Rookie Rockstar, and when you’d wish to get shout out to Rookie Rockstar, get lively within the Actual Property Rookie Fb group on the Actual Property Rookie discussion board part on BiggerPockets, or you possibly can slide into my DMs or Ashley’s DMs. However right this moment’s Rookie Rockstar is Isaiah Foster, and Isaiah says that his first enterprise associate and he closed on their first home flip final week. They bought it for $100,000. They have been all in for about 160 and so they bought it for $265,000, and what’s loopy, that is what Isaiah says is we’ve actually used none of our personal cash from this flip. They use two strains of credit score after which a tough cash mortgage to cowl all the buy and the rehab. So, congratulations to Isaiah for crushing it with that first home flip.
Ashley:
Nicely, Logan, thanks a lot for becoming a member of us right this moment. I’ve to be sincere and let you know I slept two hours final evening. I’ve been engaged on this venture, I simply needed to get it executed, and that’s why I used to be even a pair minutes late as a result of I used to be hitting one thing on it to get it executed, and I used to be like, “Man, I’m exhausted.” However I’ve to let you know, listening to your story and speaking with you, I’m all pumped up once more. I can pull one other all-nighter. So, simply thanks a lot for approaching and sharing your story. You might be tremendous cool, and I’m positive all of our listeners are going to understand listening to your story, getting tons of motivation like me. So, are you able to inform everybody the place they will attain out to you and discover out some extra details about you?
Logan:
Certain factor. Primarily lively on Instagram and YouTube. So, Instagram is @logankohn, seems like ice cream cone, however spelled Okay-O-H-N. After which YouTube is identical identify, Logan Kohn, that that’s the place I’m principally placing content material and principally lively.
Ashley:
Nicely, thanks a lot for becoming a member of us, Logan. We actually respect it. I’m Ashley @wealthfromrentals and he’s Tony, @tonyjrobinson on Instagram, and we will likely be again on Saturday with a Rookie Reply.(singing)
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