Who quits motocross racing to be a real estate investor? Well, this guy did, but not intentionally. Real estate investor Robert Leonard is the host of the Millennial Investing Podcast. An expert when it comes to finance, Robert tells us about his own journey getting into house hacks and rentals. We also go over the metrics he uses to determine his target market and the insights he’s gained from his work.
Robert got into ATV racing at 4 years old. He raced for 10 years and almost went pro before his dad made him stop.
Other than motocross racing, Robert didn’t have a plan. So he had to figure out what to do next. With his love for math and making money, he decided to study finance and got interested in Warren Buffett and stock investing. And for the next 8-10 years, he focused on that.
But when his dad told him that he’d need to start paying rent after he graduates, he decided that he wanted to have his own house. The idea of a 20-21-year-old kid buying his own house was crazy to his family. That didn’t stop him though because it only fired him up to do just that.
Robert worked throughout college and by his senior year, he managed to save up around $7,000-9,000. Using seller credit to cover the $15,000-20,000 needed for the down payment and closing costs, Robert was able to buy a 2-bedroom condominium.
He house-hacked it and rented out 1 bedroom for $700-750. At that time, his mortgage, insurance, taxes, and HOA totaled $1,150.
Robert was described by his lender as the youngest person he’s known with that good of a credit. Robert built up good credit because he started working for a credit union after graduating high school. The job required him to take a 2-week training on personal finance and after working there for 3 years, he became a loan officer. Robert knew how to underwrite, approve, and deny loans.
The truth is Robert worked hard and made sure he had everything in a row. By the time he applied for a home loan, he had a job history and credit going for 2-3 years.
Robert later sold his first house, where he made a profit and bought what he calls a live and flip. He lived on his second property as he renovated it and later on, sold it.
Then he bought and moved into a duplex. Between his second and third properties, he was able to save enough to buy his first out-of-state rental in Texas.
All in all, Robert did 3 house hacks. He now owns 4 single-family rentals, which are all located in the same market.
On one of Robert’s podcast episodes, Neil Bawa was on his show talking about his data-driven approach to real estate. It spoke to Robert, and he decided to follow Neil’s framework. Robert paid a software coder to scrape data from 7,000 cities.
From that, he had the cities ranked from 1-7000 based on 6 demographic data points. The data points were population growth, income growth, property value growth, job growth, crime levels, and trends.
After weighing each variable and making decisions on which ones are more important, Robert ranked them and looked through only the top 25.
From that, he checked the inventory, which ones had the right type of property, and if there are real estate professionals there such as property managers, contractors, etc.
Robert was left with 10-15 cities. He and his partner agreed that wherever they’ll get their first deal, they’ll focus and scale there.
It happened to be Texas. So in 2019, they bought a turnkey, single-family rental. It was a 3-bedroom, 1 bathroom house with a garage and a nice fenced yard. Bought for $65,000, it rents for $950 with plans to renew the lease for $1,050-1,100.
Their next deal didn’t happen until 2021, but they ended up buying 3 properties in March. The deals came off the MLS, and they did a light BRRR.
The first property bought at $70,000 was purchased with a conventional loan of 20% down payment with a 30-year fixed amortization.
But Robert and his partner became more creative with their next deals. They found a lender who was willing to give 85% loan-to-value but based on the new appraised value estimated after they complete rehab.
This gave them the funds to buy the property and pay for the repairs. The second property was bought for $90,000 while the third property was bought for $120,000.
The loan was short-term financing with a term of 12 months at 5% interest and a 20-year amortization. There was no inspection done. But an inspection would be needed if they decided to transition the loan to long-term financing.
One of the bigger pieces that let Robert enjoy his investing success is having quality tenants. Since he rents out single-family homes located near a school district, his tenants are families who don’t want to move often. This leads to low turnover.
Families also don’t trash the property and would even maintain it. The benefit of this is that Robert can opt to self-manage without a need for a property manager.
There are downsides though. Investing in single-family houses is harder to scale up. The process for buying 5-unit multifamily is the same when you’re buying 1 single-family. Because of this, Robert is thinking of buying 4-, 5-, 6- or 10-unit properties.
He and his partner are also thinking of buying an Airbnb in Florida which they’ll rent out 90% of the year, with the remaining 10% used for their vacations.
RV rentals are another area that they are considering getting into.
Robert’s podcast releases new episodes every Monday and Wednesday. The Monday episode is usually about real estate 101. It’s geared towards helping people get their first couple of deals.
The Wednesday episode covers millennial investing on topics such as the stock market, personal finance, entrepreneurship, and side hustles.
When we think about the likes of Warren Buffett or Kevin O’Leary, we might assume that there must be something so special about them that got them to where they are. But Robert realized that they’re just normal people. And like them, we all have the opportunity to get to where they are.
What’s key is to have the humility to realize how much we don’t know, be ready for the hard work, and to really focus.
Robert sees himself as an ordinary dude trying to build an extraordinary life.
With that mindset, Robert plans to work on his focus and define what it means for him. Since he isn’t sure yet, he plans to sit down, journal a lot, and talk with mentors.
Definitely, lots of self-reflection is needed. He wants to find what’s the best use of his time and to consider the opportunity costs of giving up other things for what he will be focusing on.
Clint Coons is one of the founders of Anderson Business Advisors, a firm that specializes in creating asset protection entities…
Justin is a real estate investor who has done almost 2000 deals across the nation and in this episode, he’ll…
David is a real estate investor and a real estate coach. He has been investing in properties for almost 20…
Andrew, a real estate investment developer, is the owner of IronGall Investments, an Austin, Texas-based real estate development company. They…
Chris is the President and CEO of Smart Growth Inc., a California-based real estate and development firm. They are focused…
Rafael is a real estate coach and an organizational psychologist based in Miracle Valley, Arizona. He owns several real estate…