189 – Creating Multiple Real Estate Businesses In Sacramento with Nan Lin

Synopsis

Having been in the real estate business for 15 years, Nan Lin is a serious investor. Although he started the first 5 years in the business being passive, he has since become engrossed in the industry and founded Kaizen Capital. He also works as an advisor at GTC Brokerage. Today, we find out what it takes to jump from being a passive investor to a serious real estate investor.

Key points

From A Regular Joe To A Serious Real Estate Investor

Nan’s entry into real estate started with doing cold calls to solicit loans. But the 2008 market crash forced him to ask for money from his parents. Fast forward 5-6 years, he had saved enough money to buy his first property, a 3 bedroom, 1 bathroom house in Sacramento purchased with $87,000 in cash.

He went on to acquire more properties until he got screwed over by a partner, making him lose a lot of money. This was the event that forced him to be more careful with making the right decisions as he wanted to spend his 30s building his wealth.

Facing Two Choices

Nan considered becoming a police officer in the Bay Area as it was a 6-figure income job. He would either do that or become a full-time investor and take real estate seriously to earn multiple 6 figures.

But because of the very public road altercation he got into, the idea of becoming a police officer got thrown out. Now he had to aggressively focus on building his portfolio.

His Investing Strategy

Initially a conservative investor, Nan used to buy properties with cash and rent them out for little cash flow. Later he learned that by increasing rent on a multifamily property, the property’s value also increased.

This made him switch to his current investment strategy of buying multifamily properties with subpar rents and value add opportunities, increase its rent then later sell the property to a new investor.

Investing in these ways means he was no longer competing with mom-and-pop investors who buy single-family fix and flips

Earning Money At Every Angle

Over time, Nan was able to assemble a team that allowed him to make money from every move he makes. He partnered with a boutique brokerage in Sacramento and brought in a property manager and general contractors in-house.

This meant that while he pays the company commission and for its services, as the owner, he also gets a cut of the company’s profits. Nan built a whole ecosystem that increases his net gain 1% at a time.

His focal point is to double his net worth every single year.

The Impact Of Covid-19

Since the pandemic started, Nan has been using hard money a lot. But the way he sees it, as long as the deal is good enough and everyone makes money then we should all be happy.

As an investor, you have to be very fluid. Depending on market conditions and what’s happening, you have to adapt and strategize on your investments.

Nan predicts that 6-12 months from now, there will be a good amount of foreclosures that will present good opportunities to buy. While he plans to take advantage of that, his bread and butter will continue to be buying multifamily properties, increasing net operating income then selling.

He believes that investors like him have multiple sources of income, so he can rely on them to be able to purchase his properties.

Why Invest In Sacramento

Nan is a firm believer in investing in Sacramento. It has the advantage of being the capital of both entertainment and technology. The area also has an appreciation that he can rely on.

Finding it to be a safe place, Sacramento also has reasonable rent control. And in case anything happens, he’s only an hour’s flight away and has a lot of contacts there. So Nan gets to have direct control over his properties.

Why Not Diversify?

A lot of people have asked Nan why he didn’t consider investing outside of Sacramento to diversify and minimize his risks. But he thinks that though bad things could happen in Sacramento, those things could elsewhere too.

At the moment, he is in the midst of buying a duplex in Las Vegas. That deal came about since he is helping a friend who will be the boots on the ground. For Nan, there would have to be an extraordinary opportunity for him to venture out to invest in different states.

The Weakness In His System

Processes work very well, but they are dependent on operators to make them work. So if ever there’s a major event such as an illness, Nan knows he won’t be able to rely on that person.

He believes he has become too dependent on people and organizations.

Outside of his team, laws could change, but depending on what happened, he would just look at his chest pieces and figure out what to do.

The 1% Rule

When it comes to buying properties, Nan follows his own 1% rule – the rent multiplied by 100 should be the purchase price – it could be less or a bit more, appreciation should be at 5%, and there must be a value add opportunity.

Next Step

Nan’s thinking about transitioning out of his role and just spending his time raising money. To be able to do that, he needs to train somebody first to do what he does – identify the next property or project to invest in then execute on his behalf.

Most of his leads he gets from off-market listings, pocket listings, and properties that meet his criteria sent by brokers and agents.

Usually, he gets so many offers every week that he’ll just pick one or two and pass on the rest.

Last Tips

Keep your job, work harder, make more money, but start to invest in real estate because there’s nothing like it.

When you invest in real estate, always do your due diligence.

You can do a house hack and buy a duplex. Then live in one and rent the other. Later, after you sell it, you can use the proceeds to buy two more properties.

Have a mindset of abundance. If someone shared their knowledge with you, share what you know with others as well.

Resources

Websites

• Kaizen Capital
• GTC Brokerage

More from our guest

• Feel free to send a message to Nan through his Instagram, Facebook, or YouTube.