One of the best things about real-estate investing is the many ways you can build wealth and income streams.
The question isn’t whether you’re a…
- Buy and hold investor (landlord)
- Property manager
- Private/hard money lender
- Note buyer (performing or non-performing)
- Fund investor
A better question is what your mix of these strategies are based on your personal goals. This week we have an investor spotlight to share with you.
Ken Reimer is a Golden Circle Investor and Advisory Board member at Direct Source Wealth and has been investing with DSW since the beginning. We are excited to share with you Ken’s investing story in his own words.
How do I replace my income…the wrong way!
I have a Masters in Electrical Engineering from Boston University and attended Harvard for Leadership Development. I started my career as an Engineer in a very large company, and I quickly decided that while I don’t mind working hard, there had to be a better way. So, I started looking for a way to replace my income while seeking financial freedom. I originally thought that the better way was trading stocks. I educated myself, read books, joined various “gurus”, created trading entities, and set out to figure out how to make enough extra income for my family, striving to replace my existing salary in the Tech world. Well, let’s just say that despite the education, sitting under various gurus, setting up multiple trading companies, and trying different techniques – I failed miserably and was terrible at trading. So, I went in search of something else…
Single Family (SF) homes…the answer?
I was fortunate in that my tech career took an unexpected turn in 1998 and I moved from engineering to project and program management, and then operations management. It was there I discovered that not only did I enjoy it, but I was very good at what I was doing, and other people thought so too! Fortunately for me, I ended up at a tech company that was in the right place at the right time, and that paid off handsomely, allowing me some disposable cash. I had already determined that I was terrible at trading the stock market, (although I didn’t quite give up for a few years!) and I had a few friends at work that were starting to buy single family rental properties. My goal was to replace my salary with passive income and look for appreciation opportunities. That was in 2012; and in Austin, TX you could pick up a four bedroom, one story home for around $220,000. So, I bought four houses, putting 20-25% down on each and spent another 5-7% in repair. So, I was on my way…or so I thought.
SF homes, not the answer…Multifamily, that’s it!
The problem with buying SF houses is that you can only buy so many before the bank doesn’t want to give you anymore loans. Then, you are required to qualify for a commercial loan. I had purchased my first three SF rental homes and was buying my fourth when this happened to me. I had two other homes (my current residence, and the previous one that I couldn’t sell, and was in a rent to own situation with the tenants)…I got qualified by a regional bank for $1,000,000, but the interest rate and terms were not great – so I was not cash flowing when I purchased. That made me stop and really look at the SF math. I concluded that buying a multi-family had to be easier and better…I started to look at opportunities; and came across a company where Kira and Matthew were working.This was late 2013, early 2014. So, I got a $1,200,000 hard money loan and ended up buying a 15-unit MF project in Chicago. This was a complete rehab. The project was originally supposed to finish in 6-9 months, but ended up taking 3 years! Kira was a huge help during this whole process as I was pushing and prodding the company I had contracted with to finish. In the end, I learned a lot about what to lookout for, questions to ask, etc. Along the way, I refinanced with a commercial lender at very good rates, and the cash-on-cash return is about 30% for the first two years. I expect it to taper off to 10-15%…
If not single entity multi-family then what?
After the experience on my Chicago property, I started to speak with Kira at Direct Source Wealth regarding what she was doing with the company; and started to invest in various properties as both a private lender and equity investor. To date, I have participated in five projects. This has been great for me because I don’t have to do the heavy lifting, and I get a payment like clockwork every month! I’m truly moving towards a passive income lifestyle…
I still own properties – two SF and my MF in Chicago. I was recently toying with the idea of purchasing another MF. After discussing this with Kira, I found that DSW is now creating opportunistic funds. So, instead of going through the potential headaches of another single entity MF, I have placed some capital into the DSW fund.
On a personal level, I’ve not quite achieved my goal, but my journey has taught me a lot. Now I can see how one day, I will achieve my goal of matching my salary at my Tech job and achieve financial freedom. The most important things to me are my kids and my faith. I’ve been greatly blessed, so I look for ways to serve others and give back. As a result of the passive income I have through my investments, I am now in a position to give back.
At Direct Source Wealth, our purpose is to help investors build wealth through real estate, notes, and via our Note Fund.
So, whether you’re still an active investor seeking direct access to notes and REO, or you’re interested in a passive income-producing vehicle like our note fund, we’re here to serve you.
To your success,
Travis, Ken and the DSW Team