How I Got Started in Real Estate (Lucelia Chou)

Transcription

In today’s episode, we’re going to cover how I got started, where I’m at, and why. Before I jump in, let me share a little bit about myself. I’m originally from Venezuela. My parents are Chinese. They migrated to the country. I was born and raised over there. I’m the oldest of five kids, and I decided at the age of 17 that I wanted to move to the United States, go to college, and basically built my life here.

Now, the story, how I actually got started in real estate, it was by accident. I had no intentions of doing real estate whatsoever. I actually wanted a nine to five. You might probably be laughing by hearing why does she want a nine to five? When I was growing up, my parents own a restaurant and I liked to call it the sweatshop. My parents worked a lot of hours and it was family-owned, family-operated.

My parents are where the managers and the cooks and my sisters and I were at the little waitresses. You can imagine little kids waiting tables. It certainly teaches you a great discipline, but when you’re a kid, you don’t enjoy waiting tables and like carrying dirty dishes and stuff like that. Going from 80 hours a week or so after school and on weekends to working a nine to five, 40 hours a week, that wasn’t too much of a bad deal. To me, it was actually great. That’s what I came to this country to do.

That’s basically what my childhood was like. Now, when I decided to move to the States I was two years into college and I was actually 19 and my parents had managed to save a certain amount of money. There were planning for the early retirement and they didn’t really know what to do with it. Me not understanding much about the stock market. I figured I’m just going to do what I know best. That’s real estate. I’ve watched a lot of HGTV shows. I’m sure what the channel is about.

In my mind, I thought managing real estate was easy. It turns out that it was not, it was actually quite a painful experience, but I wouldn’t change any of it because I am where I am today thanks to those experiences. 19, and it was about a year or two before the financial crisis hit. You can imagine the prices were all the way up top. They were very high or expensive, but I didn’t know any better. I was only 19 years old.

My parents actually saved money for God knows how long. They were actually getting started in their retirement, and they didn’t really know what to do with that money. Granted I didn’t know much about the stock market and I think in a way it was a good thing that I didn’t invest in the stock market back then. They asked me, “Luce, can you please figure out a way to help us make this money grow in a more passive way?”

The thing that ever occurred to me was real estate. I started a search, I contacted a realtor, and I told them, “Hey, these are my specifications, this is what I’m looking for.” I just basically thought that everything was going to be nice and pretty just like you watch it in HGTV and reality hits and you realize that it’s not. I got their money and I was able to find a place. Real estate was actually very intuitive for me at the time.

I knew exactly what to look for in terms of location, nearby stores, proximity to work areas, and stuff like that. That component in itself was actually very easy for me. We bought the place, actually lived there. I learned all of the nuances that come with managing real estate. I had to learn what an HOA fee was. I had to learn how to deal properly with contractors, the maintenance guys in the buildings, and stuff like that. When you’re 19 years old, it’s actually quite a learning curve. That was for the first property.

Then you fast forward three years, and my parents managed to aggressively save money again, this time they wanted to get a bigger property. It was right in the middle of the crisis. It was very chaotic. I had just graduated from college and, no jobs. I figured, “Well, I have plenty of time. Let me just jump into this project one more time.” It was quite a learning experience. It was a pretty rough path, but I wouldn’t change it for anything in the world. I definitely learned a lot from it.

The second property that I helped my parents invest was a foreclosed home. It was actually one of those groups share homes that the previous owners purchased. In a nutshell, it looked like a low life cheap hotel. Very, very questionable in terms of living standards. I actually didn’t really understand how people can actually live in a place like that, but I’m glad we actually fought it and we completely turn it around.

The house was worth at the time, less than half a million dollar, today December, 2018, it’s actually worth 1.2 million last time I checked. We did the whole remodeling thing. I tore down walls, I dealt with contractors. I had to deal with electricians, learn what the proper rates were, how to keep track of their work, how to make them show up the next day. I drove around a lot around Home Depot, Lowe’s to find the best deals that we can possibly find.

What they teach you in a lead is that if you’re going to factor in certain time for flipping, you’re going to realize that that’s not true. You always have to allow a couple of extra months or extra weeks. The flipping was supposed to take a period of like eight weeks or so. In reality, it wind up taking a total of nine months, but again, totally worth it. I ended up moving into the house. We rented out the basement. I learned how to manage tenants in the same house that I was living in.

Eventually, I helped my parents rent out the first condo purchased. That was about it around that time. Luckily I found a full-time job, so I decided to dedicate my time and my life and my efforts to my career. Throughout the years I actually managed to save enough money in my 401(k) and I believe it was in 2013 or so. My sister actually took a job in Alabama and me being the big sister, I actually wanted to go down there and make sure she was like renting a decent place. Not just like one of those questionable apartments. I just wanted to make sure that she was safe.

While we were apartment hunting, I came across this apartment and it was actually quite affordable. It was a little after the crisis happened. I liked the fact that it was close to the University of Alabama. I think it was about five minutes of a car drive, and it had all the necessary amenities. The area was actually pet friendly. I have two dogs, so I love pets. The proximity to the supermarket, like it was on the perfect centric spot. It happened to be on sale.

We were looking for a place to run, but when I asked the listing agent, he said that it was actually on sale. He just didn’t have the time to list it on the market. I basically just leveraged my 401(k). There goes, that was my first property for myself, one that I managed to buy with my savings. That was back in 2013, fast forward a couple of years. We are in 2018.

I managed to save more money again. My 401(k) and I borrowed against it. I leveraged that money. Never take it out ’cause you’re going to have to pay a lot of money in taxes, but I borrow my money from my 401(k) for the second time to buy my second condo. I also leveraged the equity that I have accumulated over the years from my first condo. A little bit from 401(k) plus cash-out refinance, which we’re going to go over that in a little bit in the next module. That’s how I got my second and property.

You fast forward maybe three months. It was actually my birthday. My sister was actually telling me about this rich dad, poor dad event, and asked me if I wanted to attend. That’s how I got started with Elite Legacy. I met a wonderful man called Pip who basically, he changed my life. He helped me view things in a way that is different and how you can actually make that passive income become true.

That’s when I realized that I actually like real estate. I’m actually good at it, naturally good at it. You know what? I want to replace my job with real estate investing. That’s when I became even more aggressive and very active with it. I didn’t have any funds. I basically milked everything I had from my first condo and I got everything I have from my 401(k). I actually had to figure out a way to get more equity or get more money.

I started going to local RIAs. I started attending a lot of the symposiums at Elite Legacy, talking to people and trying to find answers, a lot of Google search, a lot of YouTube search, talking to a lot of bankers, a lot of mortgage brokers and stuff like that, just to learn what my options are. What I realized is that the more you look, the more information you find and I also leveraged my network.

I started talking to people that are within my circle that had money saved, that had either some type of equity accumulated in which the money was just sitting there. That’s how I first came across to a friend of mine who had reached out to me a couple of years ago. She had roughly about $40,000 safe in her account and she didn’t really know much about investing. She reached out to me but at that time I was actually pursuing my masters, and I decided to hold off on that because I didn’t really have the time.

If you get to know me, one big thing about me, my brand, and it’s very important. It takes centuries forever to build up your band, it takes less than one second to get rid of it, kill it and completely flush it down the toilet. I didn’t want to commit to something that I knew I wasn’t going to be able to deliver. When I attended the first symposium, I realized, “You know what, I’m ready, I can do this, I got my MBA out of the way and I’m working a full-time job that’s somewhat flexible.” I still worked my 40 hours a week but I could get away, by doing something on the side.

I reached out to this investor and I say, “Hey, do you remember that one time? What do you think about this?” I had my numbers ready, you can’t just reach out to someone and say, “Well, I would like to invest in real estate,” but then you have no clue what you’re talking about. I said “Well, we have to invest in an area that is so and so and so. I already worked out the logistics, this is a list of a couple of properties that I found that it’s going to match your criteria, it’s going to be completely passive.

I will completely manage it myself along with another property manager that’s going to be on site.” That’s how I managed to convince this person. She went in with me, she actually put down all the money for the downpayment. Because I had great credit, thankfully, I managed to just get another loan on the books. That’s how I got to my third property at that time.

Then you fast forward it a couple of months, I would say, maybe around two, three more months, into getting into the Lead Legacy training. I found another investor who had a nice condo in New York City and they weren’t really doing anything with it. I actually reached out to them and they said, “Look, I have this property that I’ve been eyeing, it’s actually a 17 unit complex that this is the return on investment,” and all the magic numbers that you learn from Pip and how to calculate.

I showed the breakdown, “This is what the expenses are going to be like and at the end, this is what’s going to cash flow.” It wasn’t easy, it a couple of conversations. There were a lot of frustrations involved because there were a lot of stakeholders, so the investors, even though they wanted to allow me to do a cash-out refinance in their property in New York City, their family didn’t really understand what I was trying to do so it took a lot of convincing back and forth with multiple members of the family.

The great story is I managed to get that property and go to one of the lenders that I met in one of the local RIAs and I got the cash-out refinance out of it. The capital was actually– I had a lot of room to play around with the money but I needed to do that effectively so I was able to close that 17 unit deal. On top of that, I reached out to the same realtor that I worked with in Florida and I ended up buying two more single-family homes, all within the span of six months.

That’s in a nutshell how I did it, you don’t always have to have money, you don’t always have to have credit, there’re other resources that you can leverage if you have some money saved or if you have people within your circle. If not, there’s always a choice of [unintelligible 00:13:44] moneylender. Now, you might be wondering, “Luce, six months is pretty aggressive. Why do you want to do that? What really made me want to make the change is when my dad got sick last year. He retired and he was diagnosed with a terminal disease, we don’t know how much time he has left.

Female Speaker: I’m so sorry.

Lucelia: [crying] I hate talking about my personal life with people that I don’t connect with and the fact that I have to share that my dad was going through so much trouble with– thank you, with people, I just don’t want to share that information when it was very tough. It was either that or I was going to lose my job. I worked with great people, I love my team, but it’s that lack of flexibility that I didn’t like.

On top of that, I thought, “If my dad died, then how the heck I’m I going to come up with the money?” Because, obviously, I was very ignorant with the way that I managed my money, it was all about putting an empty suit, playing the part, looking the part but I in reality, have no sense. Now, my question to you is where you at? You need to assess what you have in your plate, how much money do you have in your savings account? Do you even have 401(k)? If you do, how much money do you have in it that you can actually borrow against?

If not, then consider credit cards, how much money do you have in credit cards? I actually leverage credit cards to do a lot of the closing cost, to take care of the closing cost during the six-month period that I was working and increasing my portfolio and building my portfolio. If not, then do you have any spouse? Do you have someone who’s willing to do business with you just the way I did it?

Maybe that person can be a silent partner, they’re willing to give you the money and in exchange for some type of interest rate that you can negotiate with him or her whenever you sit down together and go over the numbers. Remember, these videos are unlisted. I’m actually doing a test to see how much information I can share that’s going to be valuable to you.

It will be of a great help if you actually subscribe to my YouTube channel because that’s how I’m going to know that you’re finding the information valuable and there actually seek for more. Also, feel free to hit me up with a comment, and I’ll be more than happy to answer any questions you have at the end of each video. See you.