Today I have the privilege to share with you an interview with Ronnie Adams from Real Estate Guide 2 Success. Ronnie is a former school teacher turned successful real estate investor. Through hard work and perseverance, Ronnie now enjoys the benefits of financial freedom. His story is one that should inspire first time investors and entrepreneurs alike.
What initially sparked your interest in real estate?
A friend of mine, who was also a school teacher, was having success as an investor. He owned four investment properties at the time. He told me that he was able to take $40,000 of equity out of his properties for his own use. I’d never seen that much money in one place before. Consider my interest sparked from that moment on!
How long did it take you to go from school teacher to full time real estate investor?
In total, I would say it took about 12 months. I started in the beginning of the school year, and initially didn’t make much money due to my lack of experience. Ten months later, I was able to make more in two months than I made the entire year teaching. My teaching career was officially over at that point.
What was your first deal like… how did you finance it? Did you need any of your own money?
I would definitely consider my first deal a “learning experience”. The biggest mistake I made was purchasing a property from an owner occupant. Most owner occupants have their mind set on how much they are going to accept, and there’s not as much negotiating room for an investor. That obviously limited my profit. As far as the deal financing, I simply got a loan from a mortgage company and bought the property. My credit was pretty good, so I didn’t need to use any of my own money. I had the seller raise the sale price so I could use the difference between the sales price and the loan amount to pay for my down payment and closing costs. The property generated about $250 dollars a month positive cash flow.
What motivates you to continue to grow your portfolio?
I currently hold about 35 rental properties. I’ve completed between 80 and 100 real estate transactions since I began real estate investing. I’m not looking to increase my portfolio any larger at this time. My current focus is on sharing what I’ve learned to help people achieve the same level of success. Real estate investing is a great way to supplement existing income or solely provide for ones financial needs during tough economic times.
Did you have any mentors or specific investors you looked up to, or still do?
The only mentor I had was a friend named Allen Turner, who was the school teacher I mentioned earlier. He taught me the characteristics to look for in a prospective property, how to structure deals to ensure a monthly profit, and how to get the properties rehabbed and ready for tenants. He and I are still friends 15 years later. Having a trusted mentor that you can learn from is vital to the success of your business. They can save you a lot of time, money and heartache.
What was the best real estate book you’ve read thus far?
It’s funny, you asked that. I’ve never read a real estate investing book from cover to cover. The people featured in the books never seemed believable to me. They didn’t seem like “regular” people like me. I could relate to my friend Allen AND I had proof he was actually doing it. So everything I learned was through his mentor-ship and through trial and error. Lots of trials and a lots of errors! That’s another reason I started my website. I wanted people to see that it’s possible for a real person who was just like them to succeed in real estate investing.
Tell me a little bit about your website and what readers can learn from stopping by.
My website is designed to give the beginning investor a road map for success. All the information comes from my personal experience and is written in a way that a novice can understand. There are real estate investing podcasts, videos, articles, blog posts and resources available that provide information that any level of investor can benefit from. My vision is to create a community around the website, where anyone interested in real estate investing can come to learn and share information.
What do you think the number one reason is that people don’t invest in real estate or follow in your footsteps?
People are afraid to take that initial step. They’re afraid of the unknown factors. Can I find a property? Will I be able to rehab it? Will I be able to deal with that unruly tenant? No one wants to fail. I had those same fears myself. The difference is I knew my friend had done it successfully, so I believed I could do it too. I made sure to learn from each and every “failure” I had, and made sure it didn’t happen again. Hopefully I can be that same kind of mentor to those people who aren’t sure where to begin, or need a little extra encouragement getting started.
How do you achieve mobility and travel when you own real estate which is in a set physical location or is that something you don’t see as being possible?
Owning real estate has never kept me from traveling or having a mobile lifestyle. In fact, it’s made it easier to live the lifestyle I desire. My business is pretty much on auto-pilot. My real estate investing team and the manner in which I manage my properties allows me the freedom to make my own schedule. You want to be working ON the business, not IN the business. Now that I have grown my business, I have someone to manage tenant relations and someone to manage my rehab crews. I’m more like a Project Manager now. I can perform this duty from the beach or while traveling in another country.
Do you outsource or do you do everything yourself?
My real estate investing team consists of three in-house people and a number of subcontractors that I use for specific units of work. When I first began, I did much of the work myself. I knew that if I wanted to grow my business, I had to make better use of my time by finding new properties to purchase. As I mentioned above, I began delegating key areas of the business to others, and outsourcing to subcontractors, which freed me up to find more income generating properties.
What are your criteria for real estate property? Things like cash on cash, cap rate, loan to value, owner financing?
In order for me to consider a property for purchase, I have to be able to get it with 40% of the equity still in the property. I’m not concerned with owner financing because my deals are generally cash purchases. When I do put a mortgage on the property, the lender will generally give a 75% loan-to-value (LTV). This allows me to get my purchase and rehab money back out of the project. If the deal meets these requirements, it has a high probability of success.
How do you find most of the properties you buy?
I have a number of Realtors that deal with bank owned properties. These are people I’ve built relationships with over the years. I consider them an integral part of my real estate investing team. They know what types of properties I’m looking for and the criteria I use to evaluate potential properties. They are very effective in finding properties in areas that I’m looking to buy.
If someone reading this article wanted to get started in real estate investing today with no previous experience, what is the one biggest piece of advice you’d give them?
The biggest piece of advice I would give is to take action as soon as you can. Don’t delay. The sooner you start the process, the sooner you’ll learn what you need to do to be successful. Nothing good comes easy. You have to work at being an investor and learn all you can. It’s really no different than any other profession. You have to learn what is required before you can be successful. Hopefully, people interested in real estate investing will visit www.realesateguide2success.com to get the motivation and guidance every beginning investor needs to succeed.
A special thanks to Ronnie Adams for taking the time to discuss real estate investing and his story. Please visit his site Real Estate Guide 2 Success to learn more about getting started in real estate investing.
I found their site to be very well done – with the videos, podcasts, and information. The fear of losing money definitely seems to be a road block for most people. Out of curiosity, how did you find their website – just looking around search engines, or through a friend?
.-= Jeremy Johnson´s last blog ..Introducing The First Wizard, Lisa Irby =-.
Thanks for doing this interview Ryan. I’m actually interested in investing in Real Estate, but I’m pretty worried about taking that first plunge. However, I’ve heard of so many people my age buying properties and earning rental income from that. I won’t try to delay it too long! I don’t think I want to become a RE Guru, just own one or two rental properties!
.-= Investing Newbie´s last blog ..Money Moves =-.
I’m kind of curious as to which state he started purchasing properties in. As a resident of California, rental properties are quite expensive. Right now is the best time, as the market has tumbled, but it still freaks me out a bit. Thanks for this interview, it is helpful reading a story about a teacher turned successful real estate investor – it gives hope to others.
.-= Little House´s last blog ..How to Find the Best Place =-.
Thanks for the kind words Jeremy! That fear of losing money is VERY real. Fortunately, it’s just like most things. If you do your homework, plan accordingly and mitigate as much risk as you can, you’ll have a great chance of succeeding.
.-= Ronnie Adams´s last blog ..Note To New Subscribers =-.
You make an excellent point, and it’s one I talk about often. There’s nothing wrong with owning only one or two properties. Any amount that can supplement your income, or remove a monthly bill from your plate is well worth it.
.-= Ronnie Adams´s last blog ..Note To New Subscribers =-.
I live in New Jersey, and all of my properties are in this state. I have friends that I’ve helped buy property in Pennsylvania and Delaware as well. Although market conditions may vary from state to state, the basic information and strategies we discuss on the site should still be valid.
.-= Ronnie Adams´s last blog ..Note To New Subscribers =-.
@ Investing Newbie – there are many ways to invest out there! One firm I am familar with is http://www.vsmrealty.ca
If you are finance savvy then I suggest you study their business model. Perhaps you are replicate it on a smaller scale! They do not put down any money themselves. Instead they pool investor money to invest in real estate. Generally they negotiate 50%+ of profits! Not sure how it works anywhere else, but in Canada their investment strategy is based on RSPs!
.-= The Simple Machine´s last blog ..Estimate your next raise. =-.
Hi Ronnie – Can you talk to us about cap rates, and how you think of them? Where do you think the right cap rate is, and where do you see cap rates going this year?
What other comparative benchmarks do you use wrt to the rental yield etc.
thnx.
.-= Financial Samurai´s last blog ..The Curse Of Making Too Much Money And Not Pursuing Your Dreams =-.
Hey Financial Samurai- I stopped by your site and it was very informative. Keep up the good work. In reference to the cap rate of the market, let me first state that commercial real estate is not my expertise. That being said, I believe it varies according to what part of the country you’re in. As far as a percentage, the market has dropped on average 30% across the board. Some places were hit even harder. You really have to be careful now because, for residential property, there really are no formulas that can determine what you should make as… Read more »
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