Real estate doesn’t have to be flashy. Take it from Kevin Quintanilla-Toledo. He used to be a military guy who just stumbled upon real estate investing. But now, he’s a licensed realtor with a W-2 job and a hefty portfolio!
In this episode, Kevin breaks down how he got his first 3 properties, weighs in on the different types of loans that were available to him, and shares what it was like to be in the Marine Corps. Craig and Zeona chime in with some explanations and advice for people who are new to real estate.
—
Listen to the podcast here
Intentional Investing With Former Marine Kevin Quintanilla-Toledo
What’s up, Zee?
I am super excited to be here. You caught me. I was in a river and a stream in Iao Valley soaking and loving my life, and then I had to race here to get on the show but we made it.
I can see the glow in your eyes about you were totally in water. I was like, “Zee, where were you swimming?”
Craig, what’s with you? What is happening there? You look like you are in a dark, dingy basement.
I am in a dark, dingy upstairs. It’s funny because we are 5,000 miles away from each other. I’m in Boston, and you are in Hawaii. Unfortunately, my grandma passed away, which is fine. It has been a long time coming. She’s suffering for a while but I had to come home for the funeral and all that stuff. I have been home. I’m coming back to Denver, and I’m excited about that. We’ve got back from EXPCON. What did you think about the EXPCON, Zee?
EXPCON was fun. It was so great to be in the presence of people that are doing incredible things. It’s funny because we are hustling all the time, heads down, and building a team. It’s easy to get focused on what you are doing in your little sphere. When I’m out there interacting with all these other agents, it’s incredible to see the businesses they have built and what is possible. I left super inspired, maybe a little humbled. How was it for you?
I would say the same way. I love going to these conferences, as exhausting as they can be. It gives me a fire and motivation that I have never had before. It feels good. I feel like it helped a lot of people out at these conferences but I also learned so much from people that are crushing it. You talk about leveling your network and getting around people that are crushing it way better than you are. Conferences are the place to do that. We were hanging out with some high-level people, which is awesome. Grant Cardone was there. He was a fun person to hang out with.
What about our episode, Craig?
We’ve got Kevin on our show, who is a military guy. He has an amazing story and stumbled upon real estate in a funny, weird way. He started getting intentional not until his third property. When he did, it seemed like his eyes opened up. He started to explore different ways to finance properties. He figured out a way to help his family out. He’s got a pretty hefty portfolio and is rolling.
It’s rags to riches story. It’s great to see military people because sometimes they are so humble and simple. Sometimes they are from small towns and blue-collar. It makes you see that it doesn’t have to be this big flashy thing to get into real estate. It’s accessible for everybody, and I love that.
Kevin is such an amazing example of what you can do in the military. He talks about three different loans that you can get for 0% down if you are in the military. Make sure you read the whole thing, so you get all the little nuggets to this system and good stuff at the end in our Final Four as well. With that, let’s get Kevin on the show.
—
Welcome to the show, Kevin Quintanilla-Toledo. I’m excited to hear about your story.
I’m very happy to be here.
Why don’t you kick it off for us and tell us how you first heard about financial independence.
The first time I heard about financial independence was through BiggerPockets. It was one of the episodes but I started taking it a little bit more seriously when I was buying my third property. The first property was an accidental investment but by the third one, that’s when I was a lot more purposeful about financial independence.
Why don’t we start with property number one? A lot of people incidentally fell into buying real estate, and that’s always a fun story to tell. What year was it when you bought the first one? Give us the details.
It was April 2016. I was in Southern California in Spring Valley. It’s about a couple of miles East of Downtown San Diego. At the time, I was in the Marine Corps. Right before we bought it, I was living with my in-laws. I was newly married, and we had a baby in 2015. There was a lot of stuff happening. I love living with my in-laws. I would still live with my in-laws.
It was more my wife that didn’t want to live with my in-laws. She was like, “We’ve got to move out.” I’m like, “Are you sure? We’ve got a good game going on here.” At the time, I paid maybe $400 for groceries and stuff like that but I was keeping the majority of my paycheck. It was a townhome. It was a 2-bedroom, 3-bath and I bought it for $239,000.
What market are you in? You said Southern California but what specifically?
The town is called Spring Valley but I’m in Minnesota. I’m about 30 minutes from the Twin Cities.
You bought that first property in Southern California in 2016?
Yes.
He had said it was near San Diego, which I was surprised. $239,000 sounds cheap. I would think San Diego would be super expensive.
At the time, Spring Valley wasn’t that expensive. It was a few years ago, so it did feel expensive. It was a different market at the time. I’ve got lucky when I purchased it.
How did you buy this property? Was it 3%, 5% down?
I used my VA loan for the first time. I didn’t know what the VA loan was. I thought the VA loan was a bank and a lender. I remember I would ask all my buddies, “Have you bought a house?” “Yes.” “Do you know how to use a VA loan?” “Yes.” I’m like, “What is it? How do you use it?” They couldn’t even explain it to me. It was a mythical thing that I’m going to go down a rabbit hole trying to find. I went to the credit union I was at. It was a Navy Federal Credit Union. I applied. They took my income and pre-approved me.
What is the advantage of it?
The biggest advantage of a VA loan is it’s no money down, and the interest rates are ridiculous. They are good compared to a conventional loan or FHA loan. The con of a VA loan is the funding fee.
When you are talking about ridiculous, how different is it? Are we talking maybe a percentage point?
I remember interest rates were maybe closer to 4% at that time. If you want to connect that to now, a 30-year VA loan with Navy Federal, you could pay 0.5%, and you are down at 2.25%. I’m looking at interest rates right around 3%.
I’m shocked when people say, “I didn’t know about the VA loan. I was in the military for X years.” I’m like, “That is one of the biggest selling points. Why aren’t there shouting that from the rooftops?” They talk about free education all the time but the VA loan is super cool. Craig, we need to go to the basics and educate those cuties.
There are a lot of military folks out there that are great. If you are in the military and you haven’t heard of Military Millionaire and Military Cashflow, Mike Glaspie and David Pere, those guys are solid dudes, and they are teaching military stuff all the time. That’s what the VA loan is. Is there a certain amount of years or something that you have to be in the military?
It’s 90 days of active duty.
Can I go to the military, chill there for 90 days, and then go get me some VA loans?
Technically, what happens after the 90 days is between you and the government.
I feel the government has more power than I do.
I’m pretty sure they own you for four years. That’s the deal. The first 90 days are all the hardest parts. It’s not basic training. I don’t even know if you will survive, Craig.
I was in the Marine Corps. With the basic training, it’s not physically that demanding, even though you think it is. There’s a part of it where it is but it’s the mental games that they play with you, that are taking away the lack of sleep. You have to ask permission for everything and talk in the third person. Everything gets flipped upside down, and you have to adapt.
What about the Coast Guard? Could we do that or not?
The Coast Guard can get a VA loan.
You did the VA loan on this first one, so you did 0% down but you mentioned a high funding fee. Is that a closing cost? How much did you end up having to pay for that?
I paid about $4,000 in funding fee. The first time using the funding fee, it’s little over 2% of the sale of a home. I paid $239,000. With 2% of it, it’s a little over $4,000. The beauty of it is you don’t pay it upfront. You can move the loan. The only money I paid was an inspection and appraisal. That might have been it. I don’t think I had any costs going in.
That is the amazing thing with the VA loan, $4,000, the cost of inspection and appraisal of the property. It has some fees that are rolled in. Your monthly payment is going to be higher because you have a larger loan but your interest rates are lower, which may even offset. If you are in the military and you are not using the VA loan, you’ve got to get with it.
There is one con of the VA loan, similar to the FHA loan. It has a different hoop system. The appraisal is a little bit more particular. Often, if there’s anything wrong with the property, the appraiser is going to be a little more pricky about what needs to be done. Sometimes in a competitive market like we are seeing, people will disregard an FHA or VA loan because of those hoops.
Sellers do not love VA loans. I would even recommend if you are going to go in the VA loan route, don’t be afraid to go in a little bit higher than you would otherwise, even $10,000, $20,000 higher, your monthly mortgage payment is not going to be much different but it has to be some amount higher to make the seller willing to go with your offer over a conventional loan.
It also has to do with the agent that you are working with. The confidence that that agent has and understands the VA loan that plays a huge part in selling it to the listing agent.
I want to know a little bit more about this. You were living in a place where you were paying almost no rent and maybe $400 a month, maybe that was a few of your groceries but if you are putting zero down, it does not make it quite a high payment per month. What was this cost to you when you moved into this townhome?
My total monthly payment was $1,342. That was a PITI because I bought a townhome. I did have an HOA, so that was $290. All in, I was paying $1,632.
You are paying $1,650 a month. At this point, you don’t know about real estate investing, so you are not renting out the other room or anything like that. You are front on that payment. Does the military do your basic housing allowance to help you with that?
Yes. I was getting a BAH, Basic Allowance for Housing. At that time, it was $2,000 for me to be married. It covered my mortgage and bills. That was the first time in my life where I have had such a large amount of money every two weeks in BAH, getting out of the barracks and being able to do all that stuff. I bought a car at that time, almost a brand-new Honda Civic Si. I splurge right away.
If you are one of the military folks, maybe you don’t go get the nice car, and stuff but something that you could think is almost a military house hack, where you figure out what your basic allowance for housing is and if it’s $2,000 a month, make sure you buy a place with your 0% down, and the monthly payment is less than $2,000 per month. You can live in a place by yourself without tenants for free. You have to stay in the military. The military is paying you to build equity in your house.
I’m a little curious though. Is that $2,000 supposed to cover your groceries and some other life expenses or just housing?
It’s just housing. There’s BAH for the housing, and then there’s BAS, which is food and grocery money, which at the time was a little over $100. It’s not that much but $100 for groceries for one person, it’s something and all tax-free. Your BAH and BAS are tax-free. The only thing that you get taxed on is your basic pay.
Do you still get income? I know nothing about the military, I’m realizing but I wasn’t sure. Maybe they give you all these perks, and then they are like, “No money for you.”
You are hooked up. Rightfully so, thank you for your service and all that. You did a smart thing on this first house without even knowing you did a smart thing, which I love. It sounds like you are going into your second house. Why don’t you tell us a little bit about that?
In 2016, I bought the first one. My contract was ending in 2017. As soon as we bought and realized that I wasn’t going to stay in, I talked to my wife. I’m like, “What are we going to do?” For me, my home base, where I felt comfortable, was Minnesota. I’m from Minnesota. I figured everything was cheaper. I looked online. I’ve got the cost-of-living spreadsheets. I’m like, “It’s a lot cheaper to live in Minnesota.” For what I could work in, I’m probably going to get paid the same in California as I would in Minnesota. My dollar goes a lot farther in Minnesota.
What we did was we moved back in with the in-laws for a short time. My wife maybe wasn’t the biggest fan of it but we needed to test out being a landlord. I was like, “If I can be a landlord from 50 miles away, I could be a landlord from across the country.” It all worked out. We rented it out. The only obstacle I had right away was the HOA Board did not like that.
I went in front of the board and explained my situation. They said they were going to fine me, and they did. It was less than $400, which I was like, “It wasn’t that bad,” but they were talking about thousands of dollars. I’m like, “That’s unfair. I didn’t know I couldn’t do this.” They are like, “It’s in the documents when you buy a townhome.” I forgot.
They said it was in there. “You should have read them.” I should have read them but me buying the first place, you don’t know what you don’t know. I’ve got out of the military in March of 2017. We stayed with my parents. They lived in a 2-bedroom, 3-bath townhome, and there were 6 of us. My mom and dad were living there with my brother. He was 18, 19 maybe. There was me, my wife, and my son, which at the time was almost two. There was no room for us.
What did you rent out that place for? It sounds like you paid a fee but you could still do it.
I rented it out for $1,700. Cashflow is about $50.
That’s not something to write home about. It’s okay, especially because you didn’t have any intention of this purchase but you bought it to live there. “Someone else will pay off your mortgage. It’s going to appreciate, you are paying down the loan but it’s still a good deal for not knowing what you are doing.
I want to point out that he put no money. It’s not the return on investment. If he put $4,000 in it or something, that’s awesome still.
He rolled it in. Even if it’s $1,000 for inspection and appraisal, and you are making $50 a month, that’s $600 a year of cashflow and 60% return. It’s not bad. You are living in a Brady Bunch scenario with your parents. I suspect you are buying a place pretty soon after that. What does the second place look like?
The second place is we bought a house in St. Paul. It was a 2-bedroom, 1-bath house. We bought it right under $93,000.
Did you live there yourself or with your family?
For this one, we use something called the Military Choice Loan, also a product from the Navy Federal Credit Union. That’s also a no money down loan but when you put an offer on a house, it’s technically a conventional loan. It’s just no money down.
Can you get multiple of these out at a time, either the VA loan or this Navy Federal Loan?
For the Military Choice Loan, no. You could do a Military Choice Loan, and then there’s another product called the Home Buyer’s Choice Loan, which is the same thing, 25% more in interest rate but it’s also no money down. You could do the VA loan, Military Choice Loan, and the Home Buyer’s Choice Loan.
By the time you are three rolls around, you would probably refinance out your VA loan with 25%. That cycle is something that people could do.
It’s an option but the one flip side of the Military Choice Loan is that the interest rates are a little higher than what a normal market interest rate is.
This Home Buyer’s Choice Loan, that’s still a military-only product, just to clarify? I never heard of it.
Anybody can use the Home Buyer’s Choice Loan. The obstacle of getting it is you have to be a member of the Navy Federal Credit Union. To be a member of the Navy Federal Credit Union is you have to be a veteran or your mom, or dad, son, daughter, brother, sister, mother-in-law, father-in-law, somehow you’ve got to get connected, got to get in.
I bet a lot of people are connected to the military. By one degree, that might be a cool option for them to know about.
You’ve got the second house for $93,000. What does the payment look on that puppy?
It’s $737.
How long did you live there for?
It was right under the two-year mark. I remember when we moved in, I told my wife like, “I know this isn’t the most ideal house.” It was a small little house. It’s not the most ghetto neighborhood but it wasn’t the nicest neighborhood, and then our budget was pretty tight because we already had the VA loan.
My debt to income was already pretty much there. When I walk into that house, I smell that wet dog smell because, at the time, the house was sitting on the market for a little bit. My wife wasn’t necessarily attracted to it, and we had a young son at the time. She was maybe thinking, “I don’t know about this,” but I’m like, “I promise this is temporary. As soon as we get the opportunity, we will move on to something else.”
You mentioned that the dog and cat smell is fixable. How did you fix it?
The first floor, that’s where it all smelled like dog. I don’t think the dog went upstairs much. We ripped out the carpet on the main floor. I have learned how to lay down laminate flooring. It was an experience because I wouldn’t consider myself very handy, and then we had the carpets cleaned upstairs.
If you had to do it again, would you do the laminate flooring yourself or would you rather have hired that out?
If I had the money to hire it out, I would hire it out 100%.
How much do you think you saved for doing it yourself?
Maybe $1,000 at most, including buying the flooring.
For everyone reading, there’s a trade-off for doing it yourself and hiring contractors. I always think that you spend about half your money on materials and half on labor and so you can save about 50% by doing it yourself. You’ve got this thing. You have been there for two years. If I do my math correctly, it means you are not living there, and I suspect you rented that place out as well.
Yes. At that time, we decided to sell the property in California. We sold that for $325,000. We turned our gain, fixed up that house in St. Paul, redid the kitchen, took down a wall, redid the one bathroom, and had it painted. We started looking for a duplex. That’s how we moved on to our third property.
You took maybe $50,000 from the sale of that property right after you paid out your loan a little bit, maybe paid out the realtor and all that stuff.
I walked away with $90,000.
You bought it for $239,000 and sold it for $325,000. You walk away with $90,000. That’s awesome. You did a massive rehab to this place. You lose the $50 a month in cashflow but you get this whole big chunk. What did the rehab cost? What did you do after the rehab?
I spent about $20,000 on the material. We did the flooring and got new cabinets in there. We try to make it a little bit homier and the layout a little better.
What did you do with it? Did you refinance it or rent it out?
We rented it out for $1,300.
$1,300 on a $737 mortgage. You are making $550 or so a month over the mortgage after expenses and stuff. You have $400 or so of true cashflow.
Did you know about the 1031 exchange? Did you decide not to do that because you went in to put that money back into your investments or do you not pay taxes because it’s a government loan?
The advantage of the VA is it's no money down and ridiculous interest rates. Share on XI don’t remember if I knew about the 1031 exchange at the time. I don’t think I did but I didn’t end up paying taxes on that $90,000 because I didn’t make that much money with my normal day job. I didn’t know that. I was expecting that I was going to pay a couple of thousands of dollars in capital gains tax but I’ve got lucky.
This goes back to what we were talking about before but how much did you make as a salary from the military?
At the time, including my BAH and everything, I was making a little over $60,000.
Your actual salary is $20,000 to $30,000 a year, and then everything else. That makes sense. You’ve got the second property. It’s cashed on you, $400 or so a month. We move out to that. Was that in 2019?
That was about 2019 when I did everything. At that time, I was already out of the military.
What were you doing when you were out of the military?
I have my realtor license, so I’m a realtor but then I’ve also got my W-2 job. I work at the Navy ROTC at the University of Minnesota, so I’m a Federal employee.
You had said that right around the time you were buying your third property, this is when you found out about financial independence and focused on being a real estate investor. What changed, and when was that?
As soon as I got out of the military and got that Federal job, I had a coworker who was working on getting a real estate license for a year and a half. I was like, “That sounds pretty cool.” I’ve got all the courses done in a month. It took me forever to pass the test. When I started shopping around for brokerages, I didn’t want to go with a big brokerage. I went with a smaller one. The broker that I have had an investor-type mindset. I was talking to her about it. Most of the teams are someone involved in real estate investing.
There was a Slack channel where she said, “You’ve got to listen to this BiggerPockets podcast.” It was the episode for Miracle Morning. I remember I tried to listen to it. I couldn’t get through it. I had to listen to it 2 or 3 times, but then once I did, I listened to the other ones and then caught fire. I dove deep hard. I listened to all the episodes and then tried to absorb all that information. I’m like, “I know what cashflow is. I can buy another property. I can do something with this.”
That’s crazy that you’ve got your real estate license first before you learned about financial independence and real estate investing. You were interested in real estate even before you heard about this. You joined the team. They’ve got you hooked on the BiggerPockets, and then it was down the rabbit hole. It sounds like you have started with that education, which is your first step through your team and listening to BiggerPockets. When did you start intentionally investing?
It was right after I sold the first property because when I bought the house in St. Paul, I knew that I wasn’t going to live there. I was already thinking about the next one because it took me a while to pass the test and everything. I feel like I had time to absorb stuff anyway. I was already thinking about the next property, but then once I realized that I can make cashflow, that’s where I was like, “I can do this.”
It’s time to get real. I feel like this third one is your for real deal because you are doing it with intention. Let’s get into that one.
The third one is a duplex in a city called Rosemont, which is about 25 minutes South of the Twin Cities to St. Paul and Minneapolis. It’s a 6-bed, 3-bath duplex. On one side, it’s a 2-bedroom, 1-bath, and then the other side is a 4-bedroom, 2-bath.
What did you pick that up for?
I bought it for $350,000.
How much did you put down?
I used the VA loan again because I sold the property that had the VA on, so I put no money down on this one too.
You can use a VA loan up to four units, is that right?
Yes. Not all lenders will do it but if you find a lender that will allow you to do it, which there are, you could do up to four units.
What was your monthly payment on that?
My monthly payment was $2,053.
Did you live on one side and rent out the other? What side did you live in?
Originally, I wanted the two-bedroom side but they signed a new tenant in there. I had to honor their lease, and then we moved into the four-bedroom side. I had my brother move in with us. He was my little tenant in the basement. I charged him $300 hanging out, and the other side of it was rented for $990.
You are making about $1,300 a month and paying out $2,050. You are living in a 4-bedroom, 2-bathroom place for roughly $750 a month.
Right about there.
I hear all the time like, “If you don’t live for free, it’s not a house hack.” It’s a house hack if you can get a significant discount on your housing because what would that cost if you were to rent out the 4-bed, 2-bath.
It’s rented for $2,050.
There are your savings right there. It’s $1,200, $1,300 savings. If that’s at $2,050 and the other side is $1,000, that means you are making about $3,050 on your $2,050 mortgage payment.
Once we moved out, it was time to update the least on the other side. We raised that about right around $250. It’s cash on pretty good.
That’s a traditional house hack. Depending on your market, you can find these traditional house hacks. When you are in maybe the tertiary or the fourth layer down type city, you can find duplexes and triplexes that work. In Denver, if you try to find a duplex, a 6-bed, 3-bath duplex, you are going to pay $1 million for it. You are not going to cashflow that but it would be still a decent investment on the appreciation front. Minneapolis, St. Paul or Rosemont was a little bit different.
Did you move to that two-bedroom site or did you leave it altogether, and you are on house number four?
We are on house number four. That one, we were a lot more intentional. That’s where we were super purposeful. We are moving about once a year.
The 2 ones that you renovated, the one that you smelled dog in there, how much does that rent for?
It’s $1,375.
It was only $730 or something for your mortgage, right?
I did refinance that earlier in 2021 to bring the interest rate down, and it’s at 2.9%. My payment went down to $656.
You are making $700 a month on that one, over $1,000 on the duplex. You are bringing in $1,700 to passive income from those 2, and you have a 4th one.
The fourth one, it’s right next to the Mall of America, right off the airport by Minneapolis. That one, I did put a down payment down. It was the first time. We bought it for $260,000.
Why did you put a down payment down? You don’t have any of those loans?
There’s an eligibility amount for the VA. It changes from year-to-year. Like the FHA, it has loan limits. The first time they use the VA loan, there’s not a loan limit if you live in California. Their market is super expensive because if the loan limit is $500,000, $600,000 and a house in California is $800,000, you can’t use a VA loan or you would have to pay the difference between the loan limit and whatever is left but it’s 25% down on that part. I did it because I had the VA loan already ocular who’s already using the VA loan. I just didn’t have enough left for my eligibility to use it.
How much did you put down?
It was about $10,000. The way I came across this property, we went to a garage sale, and they are having an estate sale. The owners passed away. I knew it was going to come on the market. I went to drive by to see what was going on, and I saw the garage sale. I’m like,” Let’s check it out.” I saw that there was everything for sale inside the house.
I’m like, “I can get a look at it before it goes on the market.” I went in, checked it out and I’m like, “Would you guys accept an offer before putting it on the market?” They were like, “No, we are going to wait.” That’s all that happened but I ended up not buying that property. I bought one kitty-corner from it because I was talking about this whole garage sale thing with my team, the real estate agents.
They were like, “I’m about to list the house on that same street.” I’m like, “Really?” Most of the houses have pretty much the same layout. It was about three layouts, they could be. I already knew, so I was like, “Done. Let’s put it under contract. Here’s my offer. What does she want?” I knew it would have been a good deal, and it was a good deal.
Let’s get into the numbers. $260,000 was the purchase price. You put $10,000 down. What was that monthly payment? Was it a single-family?
That one was a single-family. It was a 3-bedroom, 2-bath house.
What’s the mortgage payment?
The mortgage payment was $1,304.
Were you renting out the other bedrooms or was that just your place?
I brought my tenant along, who’s my brother. He was my basement tenant but this time, I included him in the purchase. I remember he had some money on the side and was like, “I want to buy a new car.” I’m like, “Your Honda Accord is fine. You don’t need to buy a car. You need to invest your money and buy a house.” “I don’t know.” He was contemplating back and forth. I strong-armed him into it but it’s for his good.
That’s what Craig needs to do for me. I have been thinking about cars and the payment on the car. I’m like, “That could be another house. That would give me so much quicker to a syndication.”
This is how I do it. I calculate how much cashflow I’m going to get, and then I look at it like, “That house is paying for my cars.” Therefore, it’s not as emotional, and I still get the car that I want.
It sounds like you’ve got three properties under your belt. Two of them are $1,700. You live in one, which is costing you $1,300. You still have $400 worth of passive income towards other things that’s not housing. Do you have anything else in your portfolio?
After that, I did a subject to and then closed on another property that I’m living in.
Subject to, tell us what is that.
I still didn’t know what it was. I don’t know if I will explain it the best way. When we left California, we moved into it. My parents ended up getting a divorce. Through the divorce, they’ve got ugly. My mom had to pay some money out to my dad. After that, she was thinking about getting married. I told her, “You should do a prenup. You shouldn’t put yourself in this situation again. I’m not saying you are going to get divorced again but protect yourself.” She was like, “I don’t know. Can I give you the property? You manage it.” She wanted to buy another house. She didn’t want to continue living in a townhome because when she was married to my dad, that was their place.
I looked into it. I’m like, “How could I purchase this property with no money?” It’s not worth it to me to put money down. I could be buying my next property. I talked to a lender and title company. They said that I can’t go in with no money down. I’m like, “What if they added me on the title? What would that do?” They were like, “You can do that.” I’m like, ” Can I refinance my mom off the loan?” That’s what I did. They did it quickly indeed. They put my name, my brother’s name on there, and my mom stayed on there. We did tenants in common. Out of 100%, it was 25%, 25%, 50%, something like that.
You are like, ” How can I find a way to use some equity and borrow a little bit here?” I thought you were going to say, “What I have heard with subject to is it’s an assignment where you can get a fee in between that wholesalers to use sometimes.” I was a little bit surprised because this is super cool.
You don’t say, “I can’t.” You say, “How can I?” It’s like that whole Rich Dad Poor Dad mentality, and that’s super important. If you want something, figure out how you can do it. You wiggled your way into a subject to without knowing you could do subject to. What is subject to is it allows you to assume the mortgage of someone else.
Let’s say your mom was in trouble. She can’t pay her mortgage. You are like, “I will pay your mortgage but I need to be on the title of the house.” It’s your house but you are paying her mortgage. This is risky for her, and that’s inherently how it is. If she doesn’t pay it, then the bank can come to take the house, and you don’t want that either.
You do have an incentive to pay the mortgage. You go ahead and refinance it. You may be even can refinance it for more than what it’s worth and pull money out. You could have made money from that deal, and that’s a lot of what wholesalers do. They will assign it for a higher price. This must be not where you move into your next house because it sounds like you bought that 3-bed, 2-bath across from the garage sale place years ago.
I bought that last one in 2020. What we did with that place was we took some money. There’s already an egress window down in the basement. We had to add walls, a door, and a fourth bedroom. That place is rented at $2,230.
What is the mortgage payment on it?
It’s $1,304.
Where you are at? It sounds like you’ve got about five properties, one of which you live in. What did the subject to rent for?
It’s rented at $1,475, and the mortgage, including the HOA, is $955.
What is your total passive income at this point?
After paying everybody, it’s about $2,500.
With four properties, we are making $2,500 a month. Do you have a clear goal or it’s like, “If I pick up another four, I will probably have $5,000 a month?” Do you have that endpoint? What’s your plan?
The make me feel good number was about $10,000 but this last move that we made was a lot tougher. Between the first house that we had, and I only had 1 child, I added 2 more. I’m at three kids. I have my wife. When we moved, it was a ton of work. We went to Costco. We have down on a system. We buy the black crates with the yellow lids, labeled everything, and did all that but it was a lot of logistics and worked for us.
One thing I want to point out is a lot of times, people love to throw out the $10,000 a month thing. That’s common. You hear that. It’s like, “What’s your goal?” “$10,000.” What I like to tell people when I’m consulting with them is that even though $10,000 sounds great, if you are replacing your income, you might only spend $3,000 to $5,000 a month. I usually tell people, “Figure out what is your baseline absolute needs. For example, it could be $3,000. What would it be if you had a little extra to travel and stuff? Maybe that’s $5,000.”
The reason people need an income of $10,000 even though they are only spending $5,000 is that they need to save for the rest of their lives but if you are not needing to save anymore, that your houses are building equity for you and you still have that asset, then you don’t need that much cashflow. I wanted to point that out to people because they miss that point sometimes.
With that $10,000 number, it felt good to say, “That’s what I’m shooting for.” My wife and I had a heart-to-heart talk. As soon as we moved in, I told her, “Is this worth it? Do we want to keep dragging the kids along and doing all this stuff?” It checked me for sure. We had a good conversation because we were like, “Do we want to get to $10,000? What can we do? Are we happy?” At the end of the day, “What are we doing this for?” That’s when we run over our why and took a $30,000 view of that, and that reiterated it. “Are we still going after our why or are we going after a number that we decided?”
You could stop buying houses and pay off your mortgage. How much debt obligation do you have each month? Do you know that?
I did not add all that up.
Let’s say it’s $8,000, and you’ve got $2,500 of passive income. That’s with $8,000 a month in your mortgage payment if you pay all that off. You write your $10,500 number with no more houses, and so no work added, just cashflow added. It’s not the most optimal way of doing it but for your goals, it could be.
It’s such a high way of thinking because it’s like, “Less debt. You don’t need many places and complications,” but it takes so much longer to pay off $200,000 than it does to save up $10,000 or $15,000 for the next down payment. That’s the problem there. It takes a while
Kevin has given you all the wisdom. We are getting into the Final Four. Zee, kick us off.
Kevin, what are you reading?
I’m rereading the book Managing Rental Properties by Brandon Turner. I came across it and I loved it. It fine-tuned everything on what we were doing. I feel like there’s not a bad time to fine-tune again.
I might have read that book because Brandon sneezes when a book is written but Heather, if you ever meet her, she’s so quiet, reserved and not crazy driven like Brandon. They were compatible opposites. She’s probably a well of knowledge. She’s a decorating maven. She’s so talented in that space. It must be such an interesting raid with the ying and the yang of their personalities.
Heather is awesome. She is the rock star. She’s why Brandon is the way he is. That’s what they say, “Behind every powerful man is an even more powerful woman.” What is the best piece of advice you have ever received?
Work on your problem-solving skills. Craig, you mentioned asking, “How can I?” that’s helped me a lot. After a couple of properties, I didn’t think I could get another property. I was limiting myself and wasn’t even going to look after how I could. Working that problem-solving muscle, whatever adversity comes your way, that’s probably what’s helped me so far to figure things out and get the next property or properties.
Grant Cardone says, “The bigger the problems you solve, the more you are going to get paid.” If you think about that, that’s true. You want big problems so you can solve them and make more.
Question three, we talked about this a little bit but I don’t think you told us what your why is. What is your why?
My why is my family. I never want to miss anything for my kids. It could be a conference, sporting event, a play or whatever it is. I want to be present. My wife is a stay-at-home mom. She is my rock. Once it comes to me being able to do everything that I can do, she’s the one that grounds me for sure. Once the kids are a little bit more grown and we are a little bit more financially successful, she’s going to be the one that’s going to be bringing in the money. I’ve got my little trigger mom on the side. She doesn’t know yet. She’s my little golden hand.
I love hearing that it’s around family for you. I finished the book Shoe Dog, which is about the Nike story of the guy who started that company. He did amazing things. He created billions of dollars of wealth but in that, his kids resented him, didn’t want to watch sports, and did anything athletic. They didn’t want to wear his shoes ever. Sadly, it’s, if you give up that whole part of your life for your job, you can miss out on a lot.
I did this exercise one time. It was with my fiancé’s mom, and she’s a teacher. She has all these exercises and stuff. She put a dartboard, and it went from 0 in the center up to 10, and you had to draw dots on where every part of your life. It was like money, health, relationships, charity, spirituality, and all that stuff.
Ideally, you are ten in everything, and it’s a perfect wheel rolling but what you find is that it’s a weird-looking circle like the Nickelodeon sign. It doesn’t roll. It’s not a smooth life. When she did that, I was like, “I need to stretch this out and focus more in here.” That was a few years ago. I’m much more balanced now. It’s a long way of saying you should have a balanced life.
It’s called The Wheel of Life. People can look it up if they want to. It’s a very common coaching exercise.
A little bit more on the why. The why was established but then what I referred to is revisiting your why and checking if you are still on track with your why. I want to be there with my kids. I don’t want to miss a beat but then another part of that is how mentally present am I? What good does it do if I’m doing all this and I’m at everything physically but mentally, I’m not there?
Always work on your problem-solving skills. This will allow you to take on whatever adversity should come your way. Share on XI’m thinking about the email that I’ve got that I saw my phone come in or I’m thinking there’s a leak or whatever it is but I’m not there. That’s when I have a conversation with my wife about that. It’s like, “Should we still it down? Do we need to buy a house every year?” It has helped me oriented again. We are still going to keep doing what we are doing but we’ve got to be very mindful of the kids.
What is your favorite dinosaur?
It’s T-Rex.
Why T-Rex?
We went to a little dinosaur show, so I had all the dinosaurs present at home.
How can people find out more about you?
I’m on Instagram. My handle is @InvestedWithPurpose. My email is Kevin@BrickAndBanister.com.
Thank you so much for coming on and sharing your journey with us. We very much appreciate you. I’m sure we will be in touch soon.
Thank you so much. I’m very happy to be here. I feel butterflies. I don’t mean to be cheesy but it’s awesome.
—
That was Kevin. Zee, what do you think?
It was a great show. I feel like we talked about a lot of stuff. It’s great to talk through all the advantages of the military. I feel like our show has had a lot of military people, and the more I’m in real estate, I’m seeing, “There’s such an opportunity there.” Education is so important. I would love to go out to some bases and help people learn more about what’s possible but he has a very simple story. He’s built up a pretty impressive portfolio in a short amount of time.
He’s rolling pretty nicely in the first few years. He figured out how to do things remotely. He’s a real estate agent helping others out. He’s doing all of this with a family of 5 total, 3 kids plus his wife and him. It’s a super inspiring story. If you are in the military, I hope you enjoyed this episode. I thought it was one of my top military episodes.
Thank you for reading all the way to the end. If you like our show, please give it a like, follow, whatever your podcasting app is letting you do, and leave us a comment because that brings more people to our show. Share it with your friends because everybody needs to know about real estate.
Everyone needs to know about financial independence and real estate. Please do that, and until next time, we will see you later.
Important Links
- Kevin Quintanilla-Toledo – Instagram
- BiggerPockets
- Military Millionaire
- Military Cashflow
- Miracle Morning – BiggerPockets Real Estate Podcast Past Episode
- Rich Dad Poor Dad
- Managing Rental Properties
- Shoe Dog
- Kevin@BrickAndBanister.com
