#1 - Mastering Real Estate: Insights from a Seasoned Investor, Jerry Miller

I set a number at 150% of my expenses, really for two reasons. One, I do want to enjoy life, but number two, it's an interesting time. It would really stink to leave that day job only to boomerang back at six months because maybe real estate didn't pan out exactly like you wanted. If you leave just barely covering the bills, you might have to come back, and I don't want to see that happen. So when I do leave, I want it to be very comfortable.

Hey Areno, I'm good. It's a good day.

That's right, Fort Lauderdale. So it's great to connect with you, and I'm glad to be on the show.

Absolutely. So I've got a portfolio of 48 single-family homes. I've been doing single-family since 2006, so a lot of years there. Last three years, I've been doing multifamily, initially as a limited partner, like a lot of folks, and then jumped over to the general partner side last year. So I'm newer as a general partner. I would consider myself a co-GP on most deals. I'm not really to the point where I can lead the deals yet, but yeah, I'm growing in my real estate career. I still have a full-time IT job, but I'm making that transition to eventually replace that daytime W2 income with real estate. I'm not there yet, but I know I'll get there.

Yep, yep. Well, I do enjoy real estate. One of the things I chat about a little bit — I wrote an ebook on real estate because you can get involved from a passive side as someone who's just got some money, or you can get involved on the active side. I talk to a lot of investors that tell me they want to buy a single-family home and rent it. That's great, that's been very successful for me, and that's what we're going to chat about today and why I have so many. But that is not passive. That is not a part-time gig. That does interrupt your day job, and you have to be prepared to deal with those interruptions. Most of the people I talk to that are doing well, they're making bank — they don't have time, they don't have the attention, they don't have the ability to do active real estate, and that's okay. Maybe they will when they retire. Some of my investors are actually working with me because they want to passively invest with me now, but there will be a day when they want to go active. I'm like, that's cool, because when I go to full retirement, I'll probably do a little bit more single-family, but right now my time has to be devoted to my W2.

That's right.

I have 48, yeah.

Well, I always knew I wanted to invest in real estate. I thought I wanted five to 10 rentals, pay them off, and between my 401k and Social Security and five to 10 rentals, that would be my comfortable retirement. That was before I got in the game and fully understood what it takes to own five or 10. For about 10 years, I only had one. I bought my first one with my brother-in-law. We both came up with cash because back then, I couldn't get a bank loan. I knew what a bank loan was, but none of the banks would do an investment property. So we bought it cash, made a couple hundred bucks a month, but it really didn't make either one of us rich. But I knew if I had enough of these, I could get to where it would make a difference. Years later, with more discretionary income, I bought out my brother-in-law and started buying the ugly ducklings. I bought classy properties in a low-end neighborhood in southern Georgia, where I have family. You could buy a house for $25,000 and rent it for $500 a month. The cap rates just worked. Then I found local banks that would do 80% loan to value all day. I think it was around 2017, I bought three houses like that, and I was like, I'll do two or three a year. I began formalizing systems for tracking and market rents, doing a lot myself from 400 miles away. I recommend people do things themselves at first because you'll understand it better than anyone can teach, and nobody cares about your money like you do. I have property managers now, they're good, but they still make mistakes. You have to look over their shoulder.

So my first portfolio is in Valdosta, Georgia, about three and a half hours south of Atlanta. There are 34 there, and 14 in Milwaukee, Wisconsin. The two are only related because when you look purely at cap rate, my Georgia properties reached a point where I wouldn't buy more for the rent they produce. For Milwaukee, I was looking for value and passive income for retirement. I started looking for the Georgia-like numbers — good rates of return, good value properties. The Midwest is one of the few places where property values are still good. I got on wholesalers' lists and ended up buying 14 individual condos in two different deals. I bought in because I was looking for value for my retirement. In Georgia, I wasn't looking for appreciation — I wanted $500 a month for the rest of my life. So it took a while, but in 2022, I got a deal on six units, then eight more in February of this year. Those numbers are as good as what I saw in Georgia years ago. Right now I'm trying to put them on autopilot with the property manager and some metrics.

Well, I'm not really a fear guy, so that's not how I respond. When I got into real estate, I had the goal of a comfortable retirement. I set that number at 150% of my expenses — I want to enjoy life and I don't want to leave my day job only to come back in six months. The biggest obstacle for me was time and money. I have a day job, a family, a wife, kids. So I learned time blocking. I'd do my day job from 7 to 5, then from 5 to 6 I'd do real estate. Saturday morning from 7 to 10 became real estate hours. I compartmentalize — when I'm at my day job, I'm all about that, and when I'm doing real estate, I'm all in. If I think of something real estate-related during work, I scribble a note for Saturday. That works extremely well. Once you do a deal, it's so much easier the second time or the 50th time. You start putting systems in place and learning who you can count on.

Absolutely. We've got a website — it's largogroup2011.com. I started Largo Group in 2011. If you go there and put your email in the investor dialogue, it'll send you a short ebook I wrote on active versus passive investing. It's part of the education process I go through with my investors. Most want the benefits and control of active investing but want to invest passively — that doesn't work. A passive investment is like buying an airline ticket: you get to decide where you're going, but once you pay, you get in your seat and they take you there. You don't tell the pilot where to go. So if you're not comfortable with that, active investing is a possibility, but most people with money for passive investing don't have time to be active. At the bottom of my web page, we've got a good LinkedIn presence, Instagram, and Facebook. We post three to five times a week with value. Figure out your strengths and weaknesses, what you're good at and what you need to pay someone else for, and live in what you're good at. You'll be happier with a more sustainable business model.

Yeah, at the bottom of my web page we've got LinkedIn, Instagram, and Facebook. We post three to five times a week and try to drop some value. There are a lot of ways to learn about real estate — read books, go to conferences, go to webinars. Find somebody you think has it going on and start educating yourself. You can invest passively, and when you have the time, move to active. I think it's cool that I have both passive and active investments going at the same time. I'll be full-time real estate in the future. Look at your unique situation — what time, money, and interest you have — and carve a strategy that aligns with where you are and where you want to be.

I always love talking about real estate, man. Anytime.

You're very welcome. Good to see you. Take care.