Today we are joined by Todd Tresidder a financial guru, an author, a blogger at Financial Mentor and a strong advocate of financial freedom.
RealtyMogul.com - Todd, for our readers who are not familiar with your journey to financial freedom, can you share your story?
Todd Tresidder - “My path was a bit unusual in that I did it through paper assets, which is not how most people do it. I made a lucrative income and I lived on 30% of it and saved 70% of it and invested that pretty aggressively. I ran a hedge fund so I had quite a bit of skill on the paper asset side. In late 90s, I got uncomfortable with stock market valuations and sold the company and started reallocating my portfolio away from paper assets and towards real estate. I “retired” at age 35 back in the late 1990s. I acquired a real estate portfolio from the late 1990s, mostly apartment buildings, but I had a tax lien business too that acquired properties for back taxes and I had quite a few properties, 162 apartment units spread among 2 properties and some houses. Around 2005 I was uncomfortable with property, it was the bubble de jour so I started unwinding my property and by the end of 2006 I sold everything but the house I live in. Today I am staying very nimble.”
RealtyMogul.com - How did you use real estate to reach financial freedom? What was it like going from 1 property to 162 apartment units?
TT - “I figured out how to buy larger apartment buildings through non-recourse financing. The only risk I had was the down payment. I purchased two apartment complexes across 162 apartment units. I made some mistakes in the model I designed. By the time I acquired two, I was too busy trying to wrap my hands around what I had already acquired.”
RealtyMogul.com - What was the hardest thing for you as a real estate investor?
TT - “Property management. I was looking for good cash-flow, so I had to go out of state. I had read about the problems of out of town ownership, but I thought I could overcome it. In reality, I kept having problems with property managers. My plan was to acquire one property a year and diversify across locations but I kept cycling through property management companies.
RealtyMogul.com - If you had the opportunity to invest with some of the most established real estate companies in those out of town markets with high cash flow, what would you do?
TT - “I’ve never invested directly with a private real estate company but I would look at the numbers to see if it makes sense or not. I would do due diligence on their history and examine what their incentives are and how the compensation is structured. And I would decide if they are getting fairly compensated for their time. In the end it’s all about value creation. I would look to see if their value add is worth the cost. And value add can come in many ways. They can add value in terms of:
- Finding a good deal – maybe they have connections for great deal flow or
- Efficiency of the operation – they have local knowledge and can manage it and add value on a day-to-day basis.
RealtyMogul.com - What type of real estate would you be looking to invest in today?
TT - “Real estate that has positive cash flow and long term loans. Interest on a loan is your single biggest cost, so the smart investor is looking to lock in fully amortizing, long term mortgages. If you do that and the real estate provides positive cash flow, real estate can be a great investment.”
Todd is the author of 5 financial education books available at Amazon including How Much Money Do I Need To Save For Retirement?, The 4% Rule and Safe Withdrawal Rates In Retirement, and Variable Annuity Pros and Cons. You can learn more about Todd and his money coaching services by visiting FinancialMentor.com