Interview 1: How the Right Mindset Got Him Started Investing Out of State

Interview Out of State Investor

Today, I’m so excited to bring you the 1st of a new series of interview posts! These interviews showcase actual real estate investors who are investing from a distance. They’ll share how they got started, what their current strategy is, and advice for anyone looking to get started too. 

To kick this series off, I’m pumped to bring you Brian Skinner, a real estate investor from northern California. He writes a lot of insightful articles over on his blog, Rental Mindset. So I’m excited to hear his back story and learn more about how he invests out of state. If you haven’t checked out Brian’s blog, be sure to check it out.

Let’s get on with the interview!


Background

Where do you live?

San Francisco

Where do you invest?

South / Mid-west

If real estate investing is not your full-time gig, then what do you do for a living?

I am a small business owner. 5 years back I started a company, Breakout Mentors, that works with kids who are learning to code. It is 1-on-1 and highly personalized for each student.

How did you get started in real estate? 

I purchased my first turnkey property in 2011 when there were some incredible deals. I had casually been learning for 3 years, and more intensely in the last year, but eventually made the jump to actually purchasing a property. It was a pretty big leap of faith, but has worked out great and I have learned a lot so far.

What is your real estate investing strategy?

I am a buy and hold investor with a multi-decade timeline. I finance the properties and believe the access to cheap leverage is one of the best benefits to real estate investing. Right now I’m purchasing my properties turnkey and encourage others to get their start that way.

Some people buy all cash, but you prefer to finance. Can you explain why you think leverage is the way to go? 

It is a phenomenal deal to only put 20% down and get 100% of the benefit. Nowhere else can you get a deal like that. You can call your stock broker and try, he will laugh at you. Other countries don’t even come as close to a good a deal on mortgages. It is so phenomenal if people use it right. The key is to not use the leverage to purchase something risky, like a high-rise condo in San Diego. Yes, it may go up a ton, but it also has much more potential to drop in price than a single family home in a boring city like Atlanta. If you do 20% down and only get 2-3% appreciation per year, you are making 10-15% per year on your original investment. Over a decade just in appreciation that is up 160-300%! If you have a long time horizon, like a decade or two, you remove most of the risk.

Investing Out of State

How do you invest out of state?

Right now I purchase turnkey properties. This means a company finds the deal, rehabs the property, and often rents it out for you. I go with the best turnkey providers (in the game for 10+ years with an excellent reputation), happy to pay near market rates for the quality work they provide. With the small number of deals I am currently doing, it doesn’t make sense for me to try to save $5-10k by doing this work myself. Not to mention the risk would be greater (some unknown issue with the distressed property I purchased or overruns in the rehab). With the turnkey properties I do not go visit them and do all my research online.

What are the biggest challenges you’ve experienced investing out of state?

I think the biggest challenge is it takes a little bit more of a leap of faith to get started. When investing locally you know you can personally visit the property during the purchase, check the quality of the rehab, and be around if there are any tenant issues, it eases your mind. In reality it might not give any benefit, but there is certainly a perceived benefit (how helpful am I really going to be verifying the foundation is in good condition or doing anything that can’t be handled by phone when a tenant issue arises). Once I got past that mental barrier, I don’t think there have been many additional challenges to investing out of state. I would say it is even easier because you won’t be tempted to be more hands-on.

Today and Beyond

What does your real estate portfolio consist of today?

I have two single family homes. One in Atlanta and one in Memphis.

How much time do you spend on your real estate business?

Close to zero, in a normal month maybe an hour or two. But if a tenant moves out I will be more involved that month or if I am purchasing a new property it will take dozens of hours.

What’s the end goal? What are you trying to achieve with your real estate investments?

I want money to keep coming in each month whether I work or not. I want a nest egg bigger than a IRA can provide. It is ok if it takes a couple decades to get there, I can use that timeline to my advantage. I don’t need to live off the income within 5 or even 10 years.

What advice would you give to someone looking to get started in real estate? 

You have to work on your mindset in order to take action. That first deal will be the hardest, figure out what is blocking you mentally and it will be much easier for all future deals.

Something About You

What’s the best thing you’ve read lately?

I’m a non-fiction guy. Something light: Ghost in the Wires – My Adventures as the World’s Most Wanted Hacker. Something even nerdier – The Hunt for Vulcan: How Albert Einstein Destroyed a Planet, Discovered Relativity, and Deciphered the Universe.

Where can people go to connect with you?

Rental Mindset


Thanks for stopping by Brian! You can find him over on his blog at Rental Mindset

3 thoughts on “Interview 1: How the Right Mindset Got Him Started Investing Out of State

  1. Thanks Brian for being the first interview here!

    I enjoyed learning about your investing philosophy and why you’re a leverage guy when it comes to real estate. You summed up nicely here saying “If you do 20% down and only get 2-3% appreciation per year, you are making 10-15% per year on your original investment. Over a decade just in appreciation that is up 160-300%!”

    Also, very awesome that you took your engineering background to start up your own business helping kids learn to code 1-on-1.

  2. Nice interview OB!

    Brian, I like how you said it’s a leap of faith with your first real estate investment purchase… so true.

    If you were forced to invest into only Atlanta or Memphis is the next few years, what would your gut tell you?