YW 94 – Investing in Property at a Young Age with Brian Maida

YW 94 – Investing in Property at a Young Age with Brian Maida


Brian Maida was interested in income property at the age of 20 and by 22, he purchased his first home. Brian gives an inspiriting message to millennials on how they can do it too. He encourages people to stay away from the stock market, stop listening to financial news, and more in this episode of Young Wealth.

 

Key Takeaways:
2:50 – Brian talks about his first real estate deal.
6:00 – Jason gets Brian’s thoughts about owning condos.
10:05 – Brian likes the stock market, but doesn’t think it’s a good time to invest right now.
13:20 – It doesn’t take a lot of money to own property. You can start with a minimum of $10-15k.
19:15 – Brian is a practicing vegan and talks about his hobby website, Vegaprocity.

 

Mentioned In This Episode:
Vegaprocity.com
Cowspiracy

 

Tweetables:
“I’m not even necessarily a fan of home ownership personally. I am a fan of owning income properties.”

“If you invest in gold, there’s no income! That’s not an investment, it’s a gamble, it’s a speculation.” 

“People can get into the housing market at a younger age with $10,000-15,000. It doesn’t take $60,000-70,000.”

 

Transcript

Jason Hartman:
It’s my pleasure to welcome Brian Maida to the show. He is the founder of Vegaprocity and he is an active millennial, gen Y, real estate investor, and it’s great to have him on the show today. Brian, welcome, how are you?

Brian Maida:
Great, great, thanks for having me on the show today.

Jason:
Yeah, it’s good to have you, so give us a sense of geography, tell the listens where you’re located?

Brian:
I’m from the northern part of Jersey Shore in a town called highlands, right near Sandy Hook.

Jason:
Good stuff, good. Tell us about how you became interested in real estate investing at such a young age.

Brian:
Actually my first mentor out of college was a commercial real estate broker and investor and I learned from him really, he had multiple commercial and residential properties and seemed to be building a very large portfolio of properties and had significant wealth so that really spurred my property, real estate.

Jason:
And when did you start, at what age?

Brian:
This is at age 20, actually. That’s when I really started.

Jason:
Good stuff, same for me. That’s awesome. I bought my first rental property when I was 20 and got my real estate license in college when I was 19, so that’s a big coincidence that we’re both at the same time frame. So, you definitely say, you know, I love real estate because I think it’s the most historically proven asset class in America and so you have that example, which is so important. If we just know someone that’s real that’s doing it, it’s really helpful, isn’t it?

Brian:
It is. Absolutely.

Jason:
Rather than a guru you see on late night TV, that’s not as real as someone as you know in real life, you know, so tell us about your first deal?

Brian:
So, actually just to clarify, I became interested in real estate at age 20 and I bought my first property, I believe I was 22 or 23 at the time and it was a short sell condo, one bedroom in a town that’s relatively expensive, you know, single family home. The lowest you’re going to get into this town for is about $300,000 on a small two bedroom, maybe three bedroom ranch, so I found a property that sold for $200,000 at the height of the bubble and I bought it for 107 and it was in great shape, actually. It didn’t really need that much. I put some flooring into it, re-did the bathroom, maybe put like $7,000 into it and was able to get into the property with 3.5% down and it was a great little unit.

Jason:
So, did you actually move into that one?

Brian:
I did. I moved in for a year to satisfy the mortgage company.

Jason:
Right, right, and then you turned it into a rental after that?

Brian:
Correct, yes.

Jason:
And how did your experience go being a landlord for the first time? Mine wasn’t so good, but I persisted and it ultimately worked out over the years, but the first one, I didn’t do so well the first time.

Brian:
Yeah, same here. I didn’t prepare well. I didn’t screen them. I just took them on their word, which fortunately they paid the rent. Unfortunately though, they were on unemployment and I knew this, so I knew they had fixed income and they didn’t have a lot of expenses, so they paid the rent, but they weren’t very responsible, so they let their dog off their leash in the development and it was constant warnings and warnings and eventually ended up leaving probably with three months left on the lease. Fortunately, she didn’t damage anything and she paid all her rent, so the second time around, I did it a little bit differently and right now I have two young professionals, one is a chiropractor, one is an accountant, so they’re very responsible and it’s a much different experience for me.

Jason:
Right, right, good. So, you still got the same property now still, right?

Brian:
I do, yes.

Jason:
What happened next with your real estate investing career? Did you buy some more properties?

Brian:
So, I ended up moving out and trying to find a house to live in, because I had a dog, well, I still have a dog and I wanted a yard and I just couldn’t afford the property, so I realized that I could probably find a rental that would cost less to rent than to own and plus I couldn’t own anything, so I moved around to a couple of different properties and then eventually after doing that for about two years or so, maybe three, I decided to buy another property and I bought a two bedroom condo in a town over and now that’s where I live.

Jason:
Was your second property a condo a single family home? As an investor, I’m definitely not a fan of condos. I just find that the, having the HOA, it just adds a whole layer of complexity when you’ve got like other neighbors that share walls with you and if a guy next door has a leak or a pipe breaks it affects your unit, oh my God, just spiral complexity. Maybe you haven’t had any of that happen yet, knock on wood, hopefully you never will, but are you a fan of condos or what do you think about them?

Brian:
It’s funny you mention that because not too long ago at the first unit I bought, the gentlemen that lives above me, he had a leak in his bathroom and ended up doing some damage. Fortunately I had the right insurance, which was a landlord tenant policy and it covered the damage, but it’s a double edge sword. I mean, it’s great that you have somewhat of a fixed cost and you can kind of budget for maintenance, which would be built into the HOA fee, but I think the biggest concern is mismanagement of the association of poor management company, which when I moved into the second unit, I found a lot of inconsistencies with the management company, so I ended up joining the board with another investor in the development.

Jason:
Now, just to clarify, you’re talking about the Home Owners Association management company, not an individual property manager, right?

Brian:
Correct, correct.

Jason:
Okay, good, just wanted to clarify that and make sure people understood. Go ahead.

Brian:
Sure, so yeah, the management company. I just saw that they were, they weren’t maintaining, they weren’t keeping the property maintained, which it seemed like the property was in a steady decline, this was after the hurricane and they still hadn’t done any of the work in the hallways, so there was no carpet, there was no paint. I mean, the development was falling apart. We never saw them when we filed the documents with the mortgage company, the numbers were wrong, they were undercharging me, and it was just consistent mistakes and when we really looked into it, we decided to fire the management company and now we have a really good management company, so I stepped off the board and I’m a lot more comfortable, but yeah, I do agree, there’s a lot more to be concerned about with the property as opposed to a single family, but I guess the benefit as well is I don’t really have to worry about a $10,000 fix out of no where. I mean, there have been assessments, but they’re usually, you know, manageable, $1,000, $250, but I can understand the – appreciating a single family over a condo, because of some of the benefits there.

Jason:
Yeah, definitely, definitely. So, what are your plans in terms of investing? You know, what do you want to grow your real estate investing career or maybe I should say your future empire into?

Brian:
Yeah, so I kind of bounce between this, you know, some days I want to have 10 million in property, some days I just wanna half a million and I wanna, you know, work remotely and travel the world, so I guess it depends on what day you ask me.

Jason:
Yeah, well, that’s the life of everybody in every business in every investment, right.

Brian:
Exactly. So, I think at this point, I mean, I’m going to be 28 actually tomorrow.

Jason:
Oh, happy birthday.

Brian:
Yeah, thank you. So, I think what I’d like to do is, I think my goal is to have about a million in property by 32 and then kind of evaluate, see where I stand. I’m not against the stock market, I have impulsive nature and I tend to watch the stock market way too much and trade and it just doesn’t work out very well. I mean, I have good ideas and I’m often right, but I don’t trade it right, so eventually I’d get back into the stock market, maybe in the next recession. I wouldn’t put my money in now. So, right now I’m focused on acquiring a house to live in for a couple of years, something with a back yard for the dog, something that eventually I’ll rent out and have for the long term. So, my goal is really to build my portfolio and have something that is going to bring me income once the mortgages are paid down when I’m in my 60s or around that age.

Jason:
Yeah, good stuff. Why do you say you get back into the stock market? I mean, real estate has proven itself to you, hasn’t it? I like to call Wall Street the modern version of organized crime, I’m not a fan.

Brian:
No, I guess the only reason I would get back in is, you know, I believe it was JP Morgan that said, “When there’s blood in the street that’s when you should buy.” I mean, that’s how I feel about real estate right now, but I think there will come a time when real estate is over priced and will that coincide with the next recession, I don’t know, but I think at the end of the day, you know, some of the stocks that I follow, you know, during the recession, some of the stocks I wanted to put my money into ended up doing really well. You know, big names have come back significantly.

So, if you bought in the recession you did well, but I think that, you know, most retail investors are putting their money into the stock market now and they’re scared of real estate because it’s going to go lower, so I’m definitely a contrarian so that’s why I’m staying away from the stock market for now. I have no plans and I don’t see any major corrections for the time meaning, but at the end of the day, the stock market is much more passive, you don’t have to put as much time and effort and sweat into it. That’s the only reason I would put my money in there, but I don’t, it doesn’t work for me as of right now.

Jason:
Yeah, I just, I think if you invest in the linear real estate markets that are not based on this speculative stuff, appreciation, you know, most of the north east and the west coast, the south like Florida, south Florida areas are very speculative and I agree with you they can become, they can definitely get into bubble territory in a big, big way and those are very scary markets to me and I just, I don’t consider that investing. I think that’s speculating and hey, I’ve said it many times, I rather be lucky than good, Brian, any day of the week and I have been lucky before and made some nice capital appreciation plays, but I tell ya, the older you get the more conservative generally people become and as the years go by, I just love cash flow, I love mail box money and properties that just have that nice consistent, you know, appreciation over time.

You know, these markets, they just never make the news. They don’t have the big ups and the downs. I mean, I agree with you in some areas, definitely, real estate is going to become over valued and in the last great recession we saw pretty much every area affected, you know, so, well good stuff, any other thoughts you want to share about, you know generation Y, the millennial generation, your generation, and I guess, depending on who you ask and how you quantitative this demographic cohort, that would be today, people up to about 35 years old. I mean a gen Xer, so I’m a gen ahead of you, you know, a lot of people in gen Y, it’s the biggest demographic cohort in American history, really, about 80 million, bigger than the baby boomers by a small margin there. You know, what do you say to that generation, to your peers, about investing and about personal finance?

Brian:
Yeah, I guess the thing that first comes to mind is that I’m surprised when I speak to people my age and they think you need $60,000-70,000 to buy a house, they don’t realize there’s the FHA 3.5% down loan, 203k loans, where you can put minimum down and do construction on a distressed property. So, I think it’s important for people my age to realize that they can get into the housing market at a younger age with $10,000-15,000. It doesn’t take $60,000-70,000. I think there’s this people for some reason you need 20% to buy a house or a condo and that’s just not true. I think what I would also say is that, you know, at the end of the day, when you’re young, if you can leverage yourself and have a good safety net, make sure you have 6-9 months of expenses assuming the worst case scenario, you could really put yourself in a great position to retire at a young age and have income off property.

So, people my age, I’m definitely rooting for them to buy real estate, staying away from the stock market for the most part, maybe matching their 401k at their company, getting up to the company match, but even today, companies are, you know, scaling back and they’re not matching unless you’re at the company for three or five years or if you don’t make it through a complete fiscal year, a calender year, you don’t get the match. So, there are constantly scaling back and taking away from those retirement plans, so I would definitely have them focus on real estate if it’s something they think they can manage and do the research and find good deals.

Jason:
What do you think the mentality of generation Y is about money, you know, many – depending on where in the gen Ys spectrum, many gen Yers witnessed their parents having extreme financial troubles in the great recession that we’re theoretically coming out of, I don’t want to say we’re totally coming out of it, because there’s still a lot of issues out there.

They saw their parents get hurt by housing and there’s a lot of talk and a lot of writing saying that gen Y really doesn’t have that same opinion of the American dream of home ownership and things like that and just so you know where I’m coming from, I’m not even necessarily a fan of home ownership personally. I am a fan of owning income properties. I think renting has definite benefits.

If you rent a higher end property, you can really get a very good deal on it because the delta between and values and rents gets bigger when you go up higher in prices and the renter ends up getting the bargain, you understand that, but also as far as jobs go, I also like to say that the best thing you can have on a resume is mobility and so renting can give you that flexibility to move to where the opportunities are for your career.

Brian:
And the same way, I mean, if you’re buying property that you know you can rent out in 2-4 weeks, there’s a demand in the market, for instance, where my condos are, there’s a ferry to New York City to Manhattan and there’s always demand for rental units down here. So, I can pretty easily rent out my units and be pretty mobile in a short notice. Yeah, I do agree, at the higher end, you can definitely do better renting the unit as oppose to buying it especially when it comes to some of the maintenance and upkeep and the taxes on some of these higher end properties, but I think one other thing I would also add to my age, generation Y is, you know, really not listening to the talking heads on the radio and on the news and, you know, to do the complete opposite for the most part on what you hear in the main stream, because I think people take the financial advice to heart sometimes and I really think that these people know where the stock market is going to go, where commodities going to go. I mean, there’s people on TV spouting gold at $1,9000 saying it’s going to go to $3,000 and I know a lot of people that lost money on that trade.

Jason:
I’m definitely not a gold bug, you know, because see like, think about it. If you invest in gold or silver or non-dividend paying stocks, there’s no income! That’s not an investment, it’s a gamble, it’s a speculation. I mean, when someone buys something just purely thinking it’s going to be able to, you know, buy low and sell high, you know, mostly people are just gambling, nobody really knows that, you know, so when you’ve got a multidimensional asset class like income property where it could appreciate, which would be awesome, but if not, it’s got cash flow, right?

Brian:
Yeah and to that point, I mean, you can almost call a [cuts out] in a housing market because, you know, at 4-5%, I mean, investors will buy the properties cash for 4-5%, so when you get to that point where you can look at the expenses and look at, you know, maybe a 80% occupancy and calculate and determine that there’s 4-5-6% built into purchasing this property, there really is not a lot of downside to buying that, but with the stock market, I mean, it’s just hard to value. There’s really just no way to know. I mean, you can look at historical data, but from one company to the next unless you’re investing, you know, some of the SNP spider index, it’s really hard to value and call bottom or call a talk, how to do know when it’s overpriced other than looking at the historical data.

Jason:
Tell us about what else you do, you know, tell us about your website and so forth, you know, humane investing and your interest in animals and so forth.

Brian:
Yeah, so my website Vegaprocity.com, it’s just the vegan lifestyle blog, it’s somewhat of a hobby of mine. I have a small team of writers and editor, social media manager, and we really just putting educational material out there on how to become vegan, how to put your dollars behind companies and products that support your view point on animals. I became vegan just over a year ago and I was always an animal loving and when I made the connection and I was around farm animals and I saw the similarities to just dogs and other animals that I had been around, I just couldn’t do it anymore and decided that I didn’t want to exploit any animal whether it be a human or a non-human, so it’s definitely been a change of pace for me, because I used to each chicken parmesan and steak and wear leather, you know, so my life’s definitely changed for a better.

I think it’s been a spiritual journey for me and I just like to educate people and some people aren’t open to it, it’s not mainstream yet, I mean, it’s getting there, it’s in the news more and more, but I just have open that as time goes on, maybe 20-30 years from now, it’ll be a lot more mainstream and the truth is we’re just doing a number not only on an animals but on our environment. There’s a great documentary called Cowspiracy and it really just looks at the environment…

Jason:
I love the name. Cowspiracy.

Brian:
Yeah, it’s Kip Andersen created the film and it’s just a great documentary on, we’re just not taught on the impact of diet and, you know, animal agriculture on our society at large and just the expense it brings into the health care system and the environmental degradation. There’s just so much, it’s so intertwined to our everyday life, but we just don’t realize and I just find it of great interest, really.

Jason:
Is that your business, how did you turn that into a business if you did?

Brian:
No, so it’s not producing any substantial revenue. We’re getting about 2,000-3,000 visitors a month, but it’s just not at the point where it could sustain me. I’m in software sales. I’ve been in business development and sales since I gradated college and, you know, for the last five years I’ve worked for two companies where I’m able to work remotely from my house in an outside sales capacity, so I work from my home office, I’m out on the road, and just enjoying the flexibility of the career and having my website on the side. I don’t see it being a full time business any time soon, it’s a more of a long term 10-15 year project for me.

Jason:
Good stuff. Go ahead and give that website out again if you would.

Brian:
It’s Vegaprocity.com.

Jason:
Good stuff, Brian Maida, thanks for joining us.

Brian:
Thanks for having me.

Announcer:
This show is produced by the Hartman Media Company, all rights reserved. For distribution or publication rights and media interviews, please visit www.hartmanmedia.com or email [email protected] Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax, legal, real estate or business professional for individualized advice. Opinions of guests are their own and the host is acting on behalf of Platinum Properties Investor Network Inc. exclusively.