Today I interview Michael Smith, a residential mortgage loan officer and real estate investor in Central Florida. He began investing as a house flipper and landlord after graduating from UCF with a degree in finance as a way to secure and expedite his future retirement. His goal is to scale a business that will give him and his family financial freedom. Michael is a new investor and he’s not doing this full-time, but he’s had great success so far. I think you’ll find his story very inspiring and relatable!
Michael describes having the entrepreneurial bug as a kid, and he decided to go to school for finance after reading The Total Money Makeover by Dave Ramsay. He initially was interested in personal finance and financial planning, but while in school he took a class on real estate investment analysis and that got him so passionate and excited about real estate. His professor was an active investor himself, and that was an inspiration to Michael.
When Michael was still in school in 2011, he bought his home for about the third of the price it had originally sold for. This was a great deal, and it encouraged him to get into real estate. After graduating from college in 2012 he started doing more thorough research and found sources of information like Bigger Pockets. Last year, he decided to take the plunge and buy a rental property. When choosing a property, it was important to him to be able to sell it easily if need be in the future. In the interview, he goes over the details and numbers of that rental and how he went about it with a focus on future cash flow. Michael also talks about his first setbacks and mistakes, which are very important to learn from.
So after buying his primary home, Michael spent about two years reading and researching before he set up an LLC and bought his first rental property using a private money lender. He found his private money lender through his financial planning job; having someone trust him enough to lend him money is really impressive given how new he was in the business. He ended up using the same private money partner on his first flip as well. Make sure to listen to the full interview to find out exactly how Michael structured the finances for his rental and his flip, and the important differences between funding the two.
Michael is very happy with his rental and his tenant. (He recommends the Bigger Pockets Guide to Tenant Screening.) His long-term goal is to eventually own 100 units. He started looking into flips as a way to fund down-payments for rentals, but he’s had such a positive experience that he’s now thinking of focusing on house-flipping. He also talks us through the details and numbers of his first flip in the interview.
Recently, Michael transitioned from finance planning to a job as a residential mortgage loan officer; that way he can stay within the industry and make important connections. This new job also gives him a lot of flexibility, which allows him to catapult his real estate investing a lot faster. It really is a perfect marriage of career and real estate investment business!
Finally, Michael gave the listeners of Just Start Real Estate some words of advice on getting started:
- Learn from other people’s mistakes. Read books, listen to podcasts, do your research, and figure out what strategies work or don’t.
- Don’t be afraid to make your own mistakes.
- Be conservative. Learn how to evaluate a deal and do the math. Run your numbers by someone and get a second opinion if you’re not 100% sure.
- Take action. Make something happen.