Real estate is considered one of the most lucrative and profitable investments thanks to its high return rate and tax benefits, so why aren’t more entrepreneurs investing in real estate? Today, you’ll hear from Steven Tran, a real estate investor with properties in Washington and Oregon.
Steven recently left his successful career as a software engineer in the Bay Area to pursue real estate investing full time, and, in today’s episode, he shares his journey and his advice with us. You’ll find out how Steven’s entrepreneurial experience allows him to quickly adapt to the ever-changing real estate market and how he uses his keen problem-solving skills to tailor creative solutions that attract business opportunities and success.
We also touch on the importance of educating yourself, making your own luck, building a network, choosing positive energy over fear, and so much more! If you’re an entrepreneur who has not yet ventured into real estate, you won’t want to miss this insightful conversation with Steven Tran.
What You’ll Learn On This Episode:
- [01:35] How Steven introduces himself these days, having gone into real estate full time
- [02:18] What sparked Steven’s interest in real estate
- [06:24] Steven’s transition from a lucrative W2 job to a full-time real estate investor
- [09:06] First steps and advice for entrepreneurs looking to purchase their first property
- [12:36] Why Steven believes that entrepreneurs make their own luck
- [14:32] The power of positive energy and looking for opportunities to grow
[18:07] How important it was for Steven to build a network of mentors and supporters
- [22:45] The role that fear has played in Steven’s journey and how he overcame it
- [25:51] Tips on how to approach lenders as a self-employed real estate investor
- [28:03] Find out why Steven recommends investing in multifamily real estate
- Resources Mentioned:
- Learn more about the TRANSCEND Community
- Get the New Business Checklist for free
- Need help forming your LLC in California? Check out From Me to LLC
- Download your Wealth Building Roadmap
Connect With Us:
- On Instagram | @ashawilkersonesq
- On Facebook | @ashawilkersonesq
- Connect with Asha on LinkedIn!
- Subscribe to our YouTube channel!
Connect with Steven Tran:
- On Instagram | @stevenanquan
- On LinkedIn | Steven Tran
- Website | Diverse Realty Group
[0:00:03.8] AW: You’re listening to the Transcend Podcast. I’m your host, Asha Wilkerson, an attorney by training and an educator at heart. This podcast is all about empowering you to build a business and leave a legacy. Here’s the thing, the wealth gap in America is consistently increasing and, while full-time entrepreneurship is not for everyone, even a side hustle could change your financial landscape if you’re intentional about using your business to build wealth. I’ve run my own law firm for over 10 years and, in that time, I’ve helped countless California businesses go from idea to six figures. On this podcast, we talk about what it truly takes to build a sustainable business and find financial freedom. Let’s dive in.
[0:00:47.5] AW: Alright, everyone, welcome back to another episode of Transcend the Podcast. I am really excited for this episode. I probably say that for every episode and I really am excited for this episode as well because we’re talking with a person that I recently met, in January or February of this year, who really opened my eyes a little bit more to the possibilities of real estate and I met him in Portland, which is where I grew up. He’s from Portland and also had some time in the Bay so there’s all this synchronicity and I’m excited to welcome Steven Tran to the podcast. Welcome, Steven.
[0:01:22.1] ST: Thanks, Asha. Happy to be here.
[0:01:24.5] AW: Good. So, tell us a little bit. I know you just left your job as an engineer, right? A software engineer in the Bay Area and now have embarked on a full-time career of real estate. So, now, as of today, how would you introduce yourself?
[0:01:40.4] ST: Sure, yeah. I tend to introduce myself to everyone as, number one, real estate agent and, number two, you know, a real estate investment consultant. I built up my investment portfolio, so I had the whole gamut of short-term rentals, long-term rentals. I like to consult with people in terms of helping them with their investment journey.
[0:02:03.5] AW: Okay, yeah, I like that. Steven actually helped me buy my second property. He introduced me to the person who was selling it and coached me on the sidelines of what I should look out for and looking into the future. I definitely appreciate that. When did you decide to get into real estate as a real estate agent?
[0:02:21.8] ST: As a real estate agent? Actually, that happened pretty recently. I actually have only been licensed this last year. The funny thing is, is that it actually happened on a dare. I’ll kind of explain the story. I bought my first property, I was not into real estate, I wasn’t really looking to be an investor. I actually was living in the Bay as a software engineer.
My family had some financial issues and they’re getting foreclosed off their farm, their business failed. I had saved up a lot of money, thinking – knowing that the situation may potentially happen, knowing that I may be responsible for their housing. What happened was, “Okay, it’s finally happening, they’re finally getting kicked off the farm,” they hadn’t paid the mortgage in five years, so this was kind of inevitable.
I was in this position of, I’m going to buy them a house and I’m just stuck with this mortgage for the rest of my life. I have two older sisters. It’s a little bit frustrating that I was the one that was going to be in charge of this and, by happenstance, obviously, I was maybe venting to my sister and she said, “Why don’t you just get a fourplex then?” I had never thought of that.
I was like, “What is a fourplex? Can I do that? Can I afford this? Is this a possibility?” She was like, “Yeah, just go talk to a lender.” I had no involvement in real estate at all at this point, so I let the real estate agent and my sister lead. They found me a nice fourplex in which I put my parents in one unit and I just blindly signed everything away. I signed my whole life away, not thinking about anything, not looking at the rates.
Just like, “Okay, this is what it is. This is what is going to cost.” What happened to how I got into, obviously, I had this property now where I was in charge of these tenants and I had problems here and there of dealing with that. By happenstance, I met another investor playing basketball at the gym.
[0:04:08.0] AW: Which by the way, y’all, is the same gym that I used to practice at when I was a kid. The Hoop in Beaverton, Oregon, right? That’s the place, right? Yeah, I spent middle school and high school every day after high school at least there in The Hoop in Portland Oregon. So, continue, continue.
[0:04:23.5] ST: No, I love that place, obviously, I loved it. The only place I know that has the NBA three point line so it makes me very happy but.
[0:04:28.7] AW: There you go, right?
[0:04:30.3] ST: Yeah. So, I met this person, probably right before COVID happened. Part of my language, getting my ass beat in basketball, playing crunch, he asked me what I did and I was like, “Okay, well, I’m a software engineer” and, for some reason, I mentioned that I had a fourplex. Not that I was very proud of it or knew very much about it. At that point, I’d had it for a bout three months and he was like, “Oh, so you’re an investor?” I was like, “No?” He’s like, “You’re an investor”
A budding friendship kind of built from there. COVID happened and he happened to have a home gym. So, from that point on, I was just over there every single day. It was in Happy Valley, Oregon, so quite a drive, but I was learning so much. Obviously, one, I needed a workout, and two, he was really showing me what real estate could provide. From that, he was an investor, he probably had 25 doors at that point.
His brother was a pretty big time real estate agent. He’s a brash dude and he was like, “You know what? I could do this myself.” He’s like, “Hey, how about this? How about we become real estate agents? I dare you. Whoever gets there first gets a bottle.”
[0:05:35.1] AW: Okay.
[0:05:35.9] ST: That’s kind of where it came from. He beat me. I think I still owe him that bottle. He beat me by a couple of months but, eventually, we got our licenses and that’s the journey of me becoming a realtor. Kind of by happenstance but, you know, it’s been a fun and amazing journey so far and I think I found my new career passion.
[0:05:55.6] AW: Okay, I like it, yeah. That’s an awesome story. I feel like I also ended up in law, not so much because of a dare but because of just an opportunity that I was like, “What do I have to lose, right?” So, that was my exposure to the legal field where I definitely wouldn’t have been an attorney if I wasn’t at the right place at the right time. So, that feels similar to me with that dare with your friend. Why not? You have nothing to lose, right? Let’s just go for it.
You recently quit your job or retired. I’m going to say you retired from being a software engineer. How did you build this real estate business or do you consider the real estate side of it, your investment properties, a business? And then how did you grow it enough to be able to feel comfortable stepping away from your consistent steady income as a software engineer?
[0:06:40.9] ST: Sure, yeah. So, obviously, being a software engineer from the Bay Area, salaries were good. I was very stressed out. As I said, I had a very jumbled last three years. You know, I started with one property. I think I’m up to 11 now, 11 doors, at this point. You know, over the past three years, I keep making this nice W2 income, I was able to transition it into my first fourplex, obviously, and then another fourplex and then, in the last couple of months, I bought about three single-family homes.
There was a point where I had to think about, “Do I like my job?” And, to be completely honest, I had fallen out of love with my job about three years ago and was just doing the bare minimum. If anything, it was causing me a lot of anxiety every single day. I had standup meetings at eight in the morning that I had to wake up early for and I hadn’t really been doing the work.
My business was obviously being a realtor, so I would take my meeting and then, immediately, run out, help clients, do follow-up, etcetera, and then work on all of my real estate investments. For me to quit that job, which was really tough because it is a lot of money and I was – I wanted to keep the momentum running but, you know, I had to think to myself, “Are you making more per month on your cashflow, on your rental properties than your income?” When I thought to myself, yes, or I’m very close to doing that once I finish up these properties, I had to make the decision to drop it.
My business is tough. I’d say it’s a little combination of both. Obviously, I’m really ramping up the business as a realtor, focusing on investors but obviously I’m happy to help single-family or people purchasing their first home or single-family investments but, you know, obviously, managing the investments, making best use of those, finding ways to maximize that cashflow is really the catalyst that got me to finally feel comfortable enough to quit.
[0:08:36.4] AW: Yeah, that makes sense. So our audience here is geared towards Black and brown entrepreneurs who are focused on building a business and leaving a legacy. One of those, I’ve created this wealth building mountain of the steps that we need to take to be able to get to that legacy piece of it.
The first is having a really strong foundation. The second stage is to grow, and then the third stage is this transcending stage, which I have put investments, whether it’s 401(k) or investing in other businesses, property investments, and then exit strategy at that top level of it.
So, let’s talk to the entrepreneurs who are running their own businesses now and are thinking about getting into real estate and want to purchase their first property. Where would you tell them to start? Like, what is the first step for them?
[0:09:20.8] ST: Yeah, I mean, obviously for me, I completely got into it by happenstance and I completely lucked out. I’m not going to tell everybody, “Hey, just go buy a fourplex! It’s easy.” I would love if people did the research and one place to really get exposed to that is BiggerPockets. Asha, I know that we led through that platform.
We do some marketing on there with my team, Diverse Realty Group. For me, I love information. I love any information that can help me grow my real estate empire. So, I listen to that podcast for any tips where I can kind of maximize. You know, they have a lot of information for beginners and how to get started, how to deal with certain situations if you have one but you don’t know how to get the next one or how to scale.
If anything, I would say jump into the BiggerPockets world. Obviously, they’re not a sponsor for me or anything. If anything, we give them money to be a featured agent on their site but for me, it is one of the things that help me become a better landlord, a better investor, is all the little tips that I got from the interviews on the podcast or just going through the forum and looking for answers is just – it’s just that resource of getting more knowledge to do it.
At the end of the day too, just jumping in, honestly, working with an agent you vetted to put you in a good situation that may work for you. In a hard market, we can’t always promise cashflow, we can’t always promise the world of making a ton of money right away because I do want to let everybody know that, yeah, we’ve had a great last couple of years that have been historically good.
Real estate is a long-term investment. I’ve always thought of it that way and to be patient and to take your time and to do your due diligence with any property you jump into but, I mean, if you’re going to be holding it at 10 plus years, more than likely, it will be a great addition to your portfolio.
[0:11:11.3] AW: Yeah, absolutely. I think that one of the pieces, after having bought my first property and now, how did I prepare myself? Because I was kicking myself, like, “Man, I should have just bought when I graduated from law school,” but I didn’t think I had any money when prices were way lower in the Bay Area to what they are now, they were still expensive even back then, but I didn’t.
But one thing that I made sure that I did is I kept my credit score up and I made sure that I had a good lender profile, right? Or I think that’s how you would say that. I would be a good investment for the lender because I’ve paid everything regularly, not carrying debt with me, you know, that kind of thing. When my dad passed away and was fortunately able to leave me enough money to put down a down payment on a piece of property, I didn’t have to do anything else to get ready because my profile was ready, I just didn’t have the cash.
Then, once I was able to get the cash and do it, I was able to buy the second property right away because I didn’t realize how quickly it would change – owning a property would change my profile. So, then the second time around, to get a mortgage was even faster than the first time around because now I have this property that was worth more than the loan that I actually took out on it, which is great.
Not everyone can do that right away but it felt like the hardest part was just to jump in and get started. Like, to just take the risk.
[0:12:35.7] ST: Exactly. I listened to this podcast recently, I think it was with Ed Mylett and one thing that he always says is, I think it was one more step or open one more door to get to that next opportunity. For me, I told you a lot of opportunities of happenstance and luck but I really do believe that we make our own luck by putting ourselves in the position to be lucky.
By opening those doors and trying something new and going to a network event or talking to that one person you’re playing basketball with about something new, you open up tons of opportunities and that’s how the next five properties happened for me in less than a year.
[0:13:17.1] AW: Right, yeah. I mean, that is true and I think also, being able to speak it out loud, you know, there’s something that happens. You know, the folks who believe and understand energy was they were putting that energy out there and it’s coming back but there’s also just something about, you don’t assume what your network has around you, because every time I have said, “I want to go someplace, I want to do something,” and I just talk about it, not thinking that anyone around can actually help me do it or has anything to offer, somebody always does.
Somebody has some connection, they’ve been to that place, they know this real estate agent, you know, it always just comes together. So, don’t be afraid to speak those dreams aloud because it will help you move further along.
[0:13:57.9] ST: Exactly. I had a lot of fears as I was growing my real estate business of putting myself on camera, hearing my voice, thinking I sounded stupid. I think 99 percent of all that energy is just yourself feeling that you’re sounding stupid or looking stupid.
[0:14:14.9] AW: Yup, absolutely because there’s some – I mean, the reality of it is, as business owners of color, as folks of color, like, they’re just, it just isn’t enough representation, right? So, the judgment and the criticism that we have for ourselves just isn’t coming at us the way that we feel like it might be coming at us because there just aren’t enough people.
Put yourself out there, show up, be who you are, how you are, and the right folks will come and resonate with that and want to work with you, work for you, or help you get to where you’re trying to go. I firmly believe that.
[0:14:44.3] ST: Yeah, yeah. I’ve said that for a long time. My parents are Vietnamese refugees and I felt like I always had this sob story I was hanging onto, having people feel sorry for me, or this or that. I just had to let that go to continue to be positive and look for opportunity to grow, you know?
Not feeling sorry for myself for the situation with my parents potentially, you know, obviously not being educated and having their business fail and thinking “woe is me” that I had to deal with this. I mean, obviously, I can say that I am blessed for a lot of things and I had a lot of things not go my way, but feeling sorry for myself just wasn’t really helping me. Obviously, just saying that I have my parents and having them there is a blessing, you know? It’s blessing enough, even if their business didn’t work out or if I had to move back to take care of them. At the end of the day, I get – hopefully, I get to be lucky in that situation.
Having the positive energy and moving forward really helped me grow my career, my business, my investments by just not being too down on myself about a lot of situations, which I am still working through.
[0:15:53.9] AW: Yeah, no and I appreciate that, right? Because we all have stories, you know, and some of them include more struggle than others and I think to acknowledge that, that that is a part of our – that is a part of a number of people’s upbringing especially just brown folks, right? In the United States and an immigrant, but you’re coming from somewhere, right? It’s not just like, “Hey, let’s go somewhere.”
There’s a reason why your parents left and so there is some – there’s a part of that story that sticks with you because you are their child and then to think about, “Okay, well, where do I want to be and is hanging on to this still helping me or how do I use it as motivation in this field?” Because like, I have, not too many friends. I have a couple of friends who are like, they’re always victims, right? They’re always victims.
I’m like, “Okay. Yes, it happened, it sucked, acknowledge it and let’s see how we can move and build forward,” because if we stay stuck in this place mentally, we’ll never actually get to where we want to be in our reality, but not everyone can do that. So, I commend you for moving past that, moving through it, even if there’s still part of it that’s there but for taking the leap anyway.
[0:17:01.1] ST: Yeah. No, I think they call it refugee guilt like – I feel like it’s called the refugee guilt. I was the refugee but my parents were like just first generation guilt for that. It did push me a lot when I was younger and I used to think like, “Am I driven on spite and anger and resentment?” I always thought like, “Oh this is a great thing. I’m more motivated than others because I had this chip on my shoulder.”
You know, I had to realize at some point, and I’ll just be completely honest. I did some therapy and realized that wasn’t my motivator. It wasn’t the reason why I am where I’m at. I didn’t do everything, I agree. Letting go of that ego and thinking that’s your superpower is spite and resentment to power yourself forward is so freeing and when you can just be positive and move forward without it, you realize that you can be happy and thrive in whatever business you want to do.
At the end of the day, your clients, your friends, people you network with are going to love you more for creating that positive energy rather than the guy who just puts his head down and drives forward through all the pain.
[0:18:05.6] AW: Right, absolutely. Because your parents were new to this country, how important was it for you to build your network of support and mentors along the way? I am asking that because like my mom, my mom is not a refugee. She was born and raised in the United States but she’s not an entrepreneur. In my own journey, I’ve had to realize where I can lean on her for support and where I can’t.
I’m an auditory processor, so whenever there’s a problem, I want to talk about it but I learned that her worry for me, her concern for me was that she – I was just stressing her out when I would go through my little process of, “This didn’t work, I don’t think I like this. Let me try this.” She is very risk averse. She has worked for the same job for 39 years and was not a risk-taker, so I had to cultivate my own community and I am curious how important that was for you with parents who hadn’t been in the real estate game or even the education game in this country.
[0:19:03.5] ST: Yeah, no, it was really challenging. Like I said, my parents came over as refugees. Yeah, my dad didn’t get the chance to get an opportunity because he still had to bring the rest of his family over. He was a truck driver for 20 years before he started his business, which, you know, somebody gave him an opportunity in the Vietnamese community and he just took it and grabbed that business and ran it for 20 years.
They always pushed education on me, pushed that it was important, and obviously I can’t fault them for not giving me the opportunity to put me in the best schools, etcetera, but basically saying, “Hey, we can’t provide as much. You are going to have to figure out on your own.” I really grasped onto that in terms of education, learning as much as possible, and throughout starting college and throughout my career – at first I was actually a marketer before I transitioned to engineering.
In each of those fields, I always made sure that I had mentorship along the way. Just talking out loud, going to networking groups, and whenever I would meet an interesting person who had far more experiences, how do I add value to them? So, obviously, my network, regardless of what career I was in, has been extremely helpful in building me as the person that I am. I would say regardless of if it’s in the same career or not.
I wouldn’t be as good as a realtor if I didn’t have my mentor in marketing who taught me how to be a professional, who taught me how to work with vendors, and work with all different types of personalities. I wouldn’t be as detailed oriented with my properties if I didn’t have my mentors in engineering who helped me when I was starting my career and to be as efficient as possible.
I tell a lot of the new agents who come into this business and who aren’t getting the success that they might like or aren’t feeling like they’re catching and keeping up with me in terms of us starting at the same time, I tell them, “Hey, it is all about education. It is all about the service. It is all about learning and continuing to be a source of information for your clients.” For me, I get to have all of this past knowledge for my clients because I’ve been there.
I’ve bought all the properties, I’ve bought them with FHA loans, I’ve bought them with conventional loans, I’ve bought them with hard money, I’ve done all these situations. I’ve dealt with new properties and old properties myself, so all of that past experience plus all the mentorship and all the knowledge and, when I don’t know, I ask. It comes together to kind of build me to be who I am as the best version of myself as a realtor for my clients.
If I don’t know anything, I’m just going to find out for you. There’s new situations every day and I have to adjust and as much as I know, there’s always more to learn and more to find out for my clients and that just adds to the database in my head as a realtor.
[0:21:41.3] AW: Yeah, absolutely. I want to ask you about fear. I know that when I got ready to buy both things, I was like, “Oh my god, what am I doing? Is this a good idea?” From my dad’s house in Newberg, it’s old. He built it in the late 60s, early 70s, you know? I mean, I guess that’s not terribly old compared to houses in the Bay Area but that is older than me, I’ll put it that way. It’s also in a land where it has a well that doesn’t have city run water, right?
I was like, “Oh, this is either going to be a really good decision or a terrible decision,” because I haven’t lived – it used to be a farm also. I haven’t lived on the farm since I was like nine years old, what am I doing? Even for the second one, I was like, “Okay, even if I lose this money” – because my question to myself is, “What’s the worst case scenario and am I okay with that worst case scenario?”
If I put this money down for the down payment and I lose it all, am I okay with that? I’d rather not have that happen but is it going to be – is it worth risking it and am I going to be okay if the worst case scenario happens? I am curious, because you have grown so fast in terms of your property acquisition, now you have 11 doors, does fear show up? If so, where, and then how do you move through it?
[0:22:56.1] ST: That’s an interesting question. You know, I think I’m lucky. Obviously, I’ve had a great career in marketing and software engineering to kind of give me cushion, to kind of feel safe when I make a decision. I do think if I were to tell anybody to get into real estate, don’t risk the whole entire nest egg to get real estate. It should be a big – it should be part of a balanced portfolio for you.
You know, obviously, you have your 401(k), your stocks, etcetera. In terms of when I let go of that fear, you know I got into a lot – so these 11 doors aren’t fully mine. Only maybe like the first fourplexes. I put trust in my mentors. I asked a lot of questions and what I learned from them is there’s always option A, B, C, D, sell. Whatever the worst case scenario is, probably the worst case scenario is it burns down to the ground, you know?
I mean, even in that case it’s like, “Well, you know, you have insurance for that reason and it should be covered.” When I think of it that way, if it doesn’t work out in terms of renting it, short-term rental on Airbnb or Vrbo, then I can rent it long-term or I can do mid-term rentals with travel nurses. At the end of the day, I can flip it. When I think of all these options, I just kind of have to stay afloat until I land on, “What do I want to do with this property for the long run?”
Knowing that, obviously, have your emergency fund to get you there. If you need to do renovations, you need to do this or that, but I guess the worst case scenario is always I can just put on the market however it is and maybe get some of my investment back. I haven’t been in that situation yet where I’ve actually lost money on a deal but that is really the worst case scenario. It’s like, I don’t want to deal with this anymore, I’m just going to leave it as is. I’m going to sell it half-done.
Let’s just say you went through the renovations and you’re like, “This is too much for me, I quit,” you know? You can always sell it at a discount and just say, “Hey, I learned something. I learned this is not – it wasn’t the right situation for me and I recouped some of the money that I invested.” So, I think if that is the worst case scenario, then, okay. Well, you just paid for a learning experience.
That is how I kind of get over the fear is just having all of those fallback options. Like I said, it is always safe to put yourself in a safe financial position in general before you – don’t bet all your money on Bitcoin and don’t bet all your money on Tesla.
[0:25:13.9] AW: Right, yeah to have that diversity. I think that is a really good point. You know, worst case scenario in real estate really could be that you just sell. You sell at a loss, right? You’re going to get some money back, you might not get it all back, but you’ll probably get some. When you put it like that, that feels like a much better investment than stocks. It feels more secure to me than stocks because there’s this tangible asset that you can decide when to sell and if you want to make some improvements or not.
I appreciate that for sure, and to have some diversity, right? Not everything in real estate, not everything in stocks but to think about moving forward. Okay, last couple of questions. If someone is an entrepreneur and they’re running their own business and they don’t have any income from another employer somewhere, what are some of the things that they could do to make themselves look ready for a lender to loan them the money to get a mortgage to buy a house? What are the lenders looking at self-employed folks?
[0:26:09.6] ST: Yeah, I think it’s probably two years of tax returns for self-employed, basically showing a decent income over that longer period of time. Obviously, it’s always better to have a W2. It is a lot easier to qualify for a loan. I’m in that position right now where I just quit my W2, don’t know how I’m going to get into more real estate but, at the end of the day too, that’s the nice thing about real estate is you can be very creative.
Maybe you don’t get the loan. Maybe for example, if you have a partner or a husband or a wife that they get the loan, you know? That was you can kind of spread the wealth. For me and my girlfriend, I think the plan is always like, “We’re never going to be on a loan together because that is not advantageous for either of us.” We want to maximize as many loans in our names as possible.
In that situation where maybe if you partner is on a W2, see what they can qualify for. Even if it is not that much like you can still rent out a townhouse, you can still rent out something a little bit smaller and it is a good way to get started. That is kind of the way to go about it and if you do have money on hand, obviously, for a down payment, etcetera, maybe you just partner.
Maybe somebody else is willing to get the loan and you can jump in with them until you, obviously, you don’t have that two years of decent income shown on your tax returns, that is another option. I would say, yeah, on my loans, I think one of them I am not the named person on there. Obviously, there’s trust in your partner. You should have a contract with your partner. Obviously, don’t just put blind trust in anybody.
[0:27:37.5] AW: Right, even if it is your boo thing, make sure you get it in writing.
[0:27:40.8] ST: Things happen and that’s a good way to get into it, have the same amount in as if it were your own loan, but just have an agreement written out so that you can get started in real estate together and make sure that you find that person with the right synchronicity with you to be a partner. If you guys are completely not in the same page then that could be a real pain point.
[0:28:00.5] AW: Yeah, absolutely, and just going back to what you said in the beginning, that you fell into real estate because your parents needed a place to live, but the value of having a multi-unit property, right? So, you had other people that were in there that ended up being able to pay, to cover the entire amount of the mortgage after a little while, is that right? I remember you told me that at some point.
[0:28:20.7] ST: Yeah, so this is exciting. I mean this is why I fell in love with multifamily in general and that’s why I – obviously we sat at that Starbucks and I was singing the praises of multifamily. I don’t have to sell multifamily, it sells itself, you know? Obviously, if somebody is just getting started, if you are willing to sacrifice and live in one unit of a duplex or a triplex or a quadplex, you have somebody. You’re better off than most people because most people just pay their mortgage.
Here, you could have a situation and, yeah, you might have to do some management or you get to pay a property management, whatever you feel like, but you have some money coming in to offset your mortgage. I think the most exciting thing about real estate, with multifamily in general, is something I call forced depreciation. This is something I also totally fell into by a complete accident.
What I learned from first-hand experience was I wanted it to refinance and take advantage of those great rates last year. I’d had my property for about two years. Over that time, I had tenants leave. I had bad situations, I had new tenants come in at market rate, and so I had raised my average rent from when I purchased my property about $900 a month per unit, three out of the four units, my parents were living in the fourth one, to about $1,300.
Great. Now I am starting to make some money, and so when I got the appraisal, this is the interesting part, if you have a single-family home, if you have ever gone to refinance, or just purchased a home in general, an appraisal is based on comparisons. So, you have a three bedroom home, two bath, they’re going to find other three bedroom homes with two baths in the area and see how much they sold for and that’s basically how they get the new value of your property.
Well, multifamily, up to four units, half of that value of your appraisal is comparisons, they’re going to have to find other fourplexes or whatever to do a comparison approach, but they have something called the income approach to your appraisal. Because I raised my rents, I was able to drastically increase the appraisal value of my property and I could give this with real time numbers like I bought my property for 5% down at 675 because I bought it with an FHA loan, which I don’t want to explain too much but it is a loan that’s –
[0:30:20.4] AW: Yeah, no that’s fine. We can research.
[0:30:22.0] ST: Yeah, exactly. It is advantageous to put a very low down payment for a property. 5% down at 675. Last year when I refinanced, I’ve it for about two years. The comparison approach, other fourplexes that sold in that area recently was about 750. So, great, I made about 75k on the comparison approach but, because I raised my rents from $900 a month to 1,300, the income approach value for my property was 950.
That averaged out to bring the value of my properties to 810, so I had a $135,000 in equity in less than two years. So, I was able to “force appreciation” and, now, my parents as of late, I bought them a townhouse so they could move out. I was able to rent out that unit. Now, all my units rent for – I think I am close to $1,500 per unit on that one property. So, if I were to guess conservatively, that property is probably worth over 900,000 at this point.
I was able to force appreciation on that property basically forcing my net worth to grow and I have done this on a couple of properties already too. So, that is why I get super excited about multifamily. You know, I always say it’s my big tech break because, obviously, working as a software engineer, you want to join the Twitter before the IP. You want to do this and I never lie, you know?
Falling into real estate gave me that opportunity to finally have that big win, that big net worth growth. Obviously, you’re not going to sell your Twitter software when you’re holding equity in that stock if you worked at Twitter. So, I kind of feel the same way about my properties. It is not money in hand. It’s there, it’s part of my net worth. I can leverage it, you know I could get a HELOC, I could do a lot of things to grow my portfolio, but that was my big break is learning that.
Every opportunity get whether a property makes money or not and I tell a lot of people, don’t expect things to cash flow with how rates are and everything. Things take time, situations change, you can always refinance and get into a better situation later but, if someone is paying your mortgage or at least part of it, you’re better off than 90% of homeowners.
[0:32:22.8] AW: Yeah, absolutely. Well, I think that’s great. I mean, I appreciate all of the bits and pieces of information that you have dropped today and just in general, the conversations that we have had. If people want to follow you and see about your – you post a lot about renovations on Instagram and about how your properties are changing. If they want to find you what is your handle on IG so they could find you, or where do you want them to find you?
[0:32:47.8] ST: Well, they can find me easily, just Steven Tran, Steven with a V, last name, T-R-A-N. Just type in Portland Realtor and you’ll find me pretty easily. I am part of Diverse Realty Group. On Instagram, it’s easy to find me because I have it and I probably should update it to be more realtor focused. I’ve had the same screen name since I was 14 and I just translated it to everything. So it is @stevenanquan. I used to do a lot of martial arts and Kung-Fu as a kid and I guess I just kept that screen name, so that is the way to find me.
[0:33:18.8] AW: I like it.
[0:33:19.8] ST: Yeah, I can’t be too realtor focused. You know, I got to share my tortoises and my basketball, so I like to have a little bit of my personal touch with my Instagram but I do share a lot of stuff with my properties and information on my real estate career.
[0:33:33.5] AW: Awesome. Well, thank you, Steven, so much. You all, go find Steven on Instagram or Google him on the Portland area for real estate, as a real estate agent and just stay tuned. If this conversation made you feel like, “Oh my gosh, I don’t know how I’m going to get into real estate,” just sit with that feeling for a moment and don’t close it off. Say, “This is where I want to go,” and then start thinking about the things that you need to get there.
As always, you know where to find me. Hit me up on Instagram, Asha Wilkerson, Esq. Let me know how you enjoyed the episode and we will see you back here next week. Thanks you all.
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