While flipping dumbbells, I became very familiar with gym equipment. And since I had access to dumbbells and good relationships within the industry, I figured a good next step would be to turn my garage into a proper gym. After all, I was getting bored very fast with my workout setup:

Like the responsible adult I am, I saved half. That left $10K for the next thing. I want to transform this garage. Mom’s not only on board, she’s super supportive, as long as she can still park inside. So now I could map out where everything will go, minus one vehicle.

Phase 1: Cleaning and Mapping

The garage was previously used for storage, so we had to clear that out. Here’s a throwback to my mom helping me clean up. She was the best:

After cleaning it out, I used painter’s tape to map out where everything would go. A modular squat/bench rack, a deadlifting platform, one vehicle, and an area for free weights and barbell work:

Phase 2: Flooring

Remember, COVID was in full swing. So not only were existing gyms shutting down, but also upcoming gyms were put on pause. What does that mean? Massive discounts on gym flooring! Got a few TaskRabbits to help me:

Phase 3: Equipment

With all those gym openings on pause, equipment retailers had their inventory sitting much longer than they wanted. Not only did I get discounts on flooring, but also on bumper plates, barbells, benches, and a deadlifting platform. Next step was to install a modular squat/bench rack for space efficiency. I had to hire another TaskRabbit because..well, look at these instructions:

Phase 4 onwards: Using the gym

Okay, now I’m done. I have this beautiful garage gym. I’m using it. I’m exercising regularly and finally making some aesthetic progress. I’m back into my relationship with my gf, up for promo at work, and my family bonds are stronger than ever. I’m riding a high and life is very, very good right now. Evidence from my camera roll at the time: it’s filled with douchey selfies, videos of random street cats that visit me, and even visiting puppies and playing the “what if” game of future life.

I was proud of the gym I built, so I often left the garage open (it’s a safe neighborhood). As the neighbors came by, they told me how much they wish they had something like this - after all, their gyms were still closed because of COVID.

So I would invite them to work out. One of them came and gave it a try. He enjoyed his workout and talked about how awesome it was to finally have a place to exercise. He was so thankful and even said he’d be willing to pay for the opportunity to use it again..

That got me thinking: with all the gyms in the country closed down, who else might be willing to pay for a garage gym? What if I could rent out my garage gym? Or better, what if I could build an entire platform to connect all garage gyms in the country to people in need of gyms? That could surely take on traditional gyms across the country! Stay tuned - in Part 3, I’ll tell you about FitPad:

Picture yourself back in the spring of 2020, COVID just hit. Very quickly, everything shut down and the world was on pause. Our company offices were closed until further notice. All social facilities were closed as we were ordered to stay at home. Personally, I was going through a breakup. Everything felt like shit. Let’s be honest: everything was shit. It was the perfect storm for me to move back home with my family in Atlanta. And while COVID brought along a ton of negative implications around the globe, it also brought opportunity.

Things started strong, but then even at home, I quickly felt isolated. My family’s home in Atlanta is triple the size of my cozy 1-bd in SF, but I still felt suffocated. And worse, I couldn’t escape. Not even to go to the gym. So I decided to bring the gym to me. I bought a bench, dumbbells, and mats, and leveraged the other half of our two-car garage:

With not much else to do, I was exercising regularly. I graduated from the 20-lb dumbbells like the hulk monster I am and needed to get more.

But this proved harder than I thought. Higher-weighted dumbbells were sold out, everywhere. It didn’t take much research to learn that supply chains were among the first “disrupted” aspects of COVID - remember the days of trying to get Lysol, face masks, and hand sanitizer? Capitalizing on the medical industry felt too immoral to touch. But the disruptions were in many other places.

And the disruption didn’t just affect items whose demand increased. It also affected items whose demand stayed constant. Producers were unable to supply materials to get to their customers. Even worse, it was really difficult to forecast consumer demand because nobody knew how long COVID would last. So even with demand constant, supply couldn’t keep up. This was a market opportunity.

I went to all of the sporting goods stores in my suburb outside Atlanta and tried to figure out which dumbbells were most popular, but also in short supply. The answer was clear, and in hindsight, obvious: adjustable dumbbells. People working out in their homes needed to be space-efficient. They needed adjustable dumbbells. And, at the time, only two big players existed: PowerBlock and Bowflex.

This was a luxury item was highly versatile, space-efficient, and extremely hard to procure. People were reselling for double, sometimes triple the retail price. So I thought, “why can’t I?” That was the business plan. That’s it. So now the hard part: how do I source these? Every retailer was sold out, constantly:

I called both manufacturers directly. Bowflex wouldn’t even return my call. PowerBlock confirmed I was too small of a fish. Which got me thinking…who are the big fish? So I asked, and the rep told me all the distributors in my zip code.

Okay, new plan: Get to the big fish distributors (Dick’s Sporting Goods, Academy Sports & Outdoors, and Johnson Fitness).

I quickly visited them all, multiple times. And after a few visits, I was able to find “the one.” The Willy Wonka. The Tony Soprano. The one who knew what time the trucks came and knew what inventory would be on it the morning of the delivery for their specific store. After a few more visits, I got to know them personally and built relationships quickly. After all, by this point, I was the “regular” looking for one item and one item only: adjustable dumbbells.

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Now the playbook was easy: rinse-and-repeat for every retailer in the area. It wasn’t long before I developed relationships with all of them. From there, the execution was easy. I offered to cut them in. In return for some spare change ($50 - $100), I would be the first phone call they made when either a PowerBlock or Bowflex was on their schedule that morning. I’d get in my car, head over, and secure the inventory. Boom!

This brought me to one of the most important “business” lessons I’ll always carry forth.

Lesson: Relationships are the most powerful market force.

In my case, I built relationships with various managers. Before I made the offer above, I was a regular. I stopped to talk to them, hear them, and just shoot-the-shit about life, COVID, etc. It was from those conversations that I was able to get these partnerships in play.

This became my routine for the next several weeks. Even my bedroom, which doubled as my WFH space, was often filled with boxes that weren’t yet sold.

The selling was straightforward, since there were only a few product SKUs. I cross-listed on OfferUp, Letgo, FB Marketplace, eBay, and Craigslist. The margins were so great that I was even shipping these outside of Atlanta.

Naturally, as time went on, my unit economics got worse. Time-to-flip my inventory was increasing, buyer premiums were shrinking, and the manufacturers realized they could hike prices. My margins were reducing...fast! Which taught me another lesson:

Lesson: Know when to fold ‘em

It was time to hang up the hat. Gyms started reopening. And even if someone’s gym wasn’t open, nobody needed more than one set of adjustable dumbbells. I was also living with family, so you can imagine how happy my mom was with dozens of boxes of “shitbells” (her words) that she couldn’t physically move. Once my margin crossed below the 60% line, I made the decision to stop buying more and focused on offloading my inventory. My adventure was closing as fast as it started.

After all was said and done, I netted ~$20K. Not enough to end world hunger, but enough that the thrill gave me fresh juice in my life when things were pretty low. It also gave me some spare change to fund my next side hustle: building what I was certain would become “the next Airbnb.” But that’s an article for another time…

I went down the rabbit hole, appealed mine, and attended multiple hearings to learn about this fascinating process. Here’s my experience, what I learned, and what you can do to save.

Step 1: Find your home details

Go to the SF Treasurer’s Office website and type in your address. Look up your tax bill and make a note of your Total Taxable Value, Total Tax, and the two installment due dates at the top (usually mid-April and mid-December):

Note: do not miss these payments! If you do, you cannot appeal. Even if you’re reading this late, just pay before the deadline. You can still appeal and will receive a refund check, if successful.

Step 1b: Did you catch that $7K Exemption?

Quick detour: did you notice the $7,000 exemption right above the Total Taxable Value on my tax bill above? Every homeowner living in their home in SF should have this. If not, do it. Stop reading. Do it now. It can even be emailed. Here’s the form and the website to file it. Even if you miss the Feb 15 “deadline,” you can still receive 80% of this value.

This process is free, easy to do, and only needs to be done once. That’s $83 of savings per year in perpetuity. Now your Costco membership is free. You’re welcome.

Step 2: Choose the right process

Back to the meat of it. There are 2 options for lowering your property taxes and which option you choose (you can choose both) depends on when you’re reading this article:

• Informal Review (Jan 2 - Mar 31)

• Formal Review aka “Appeal” (Jul 2 - Sep 15)

Option 1: Informal Review (Jan 2 - Mar 31)

This process is fairly quiet: it’s handled by the staff and there is no hearing: an introvert’s dream. You fill out an online form and randomly get an answer via snail-mail in July. Want to know if this is right for you? Go to Zillow, type in your address, and scroll down to the Comparable Homes section:

If you see some comparable sales that are lower than your Total Taxable Value, this may be a smart route to pursue. Find at least two comparables that you like and submit them here by March 31st. Pro tip: filter “sold dates” to as close to Jan 1 as possible, but no later than Mar 31.

Option 2: Formal Review / Appeal (July 2 - Sep 15)

This process is a little more involved, but I still encourage it. You submit the appeal form using comparables (same as Option 1). However, this time, you follow the decline-in-value section on the same website, pay a $120 fee (previously, $60), and might have someone from Assessor’s office contact you.

First, submit this form either online or via snail-mail along with your comparables. Then, if they contact you, they will ask: “How did you come up with your number?” Be prepared for this. I was able to use my RE background to handle this on the spot. But I recommend having your comparables home sales ready to explain your methodology.

Then, they will either agree, disagree, or say they need more time. In any case, the next step is to attend a virtual meeting. This scheduling may take up to 1-2 years - yes, you read that correctly. But do not miss this meeting; even if they agreed with your valuation, missing is automatic grounds for denial.

In the last meeting I attended, an owner of a gorgeous 2bd Marina condo (that I may or may not have Zillow-stalked) didn’t show up. Like all no-shows, their appeal was auto-denied. Based on what I dug up on public records, this missed meeting decision cost them $3,371/year — or $281/month in lost cashflow. Do not miss your meeting!

Step 3: Attend the Meeting

Also, the meetings are really intriguing! If they agreed with your valuation, you’re in the first part of the agenda and it’s a quick and easy process:

• Raise right hand, swear under oath you’re not lying

• Confirm you’ve agreed and that you’ll pay the fee

• Done, you can leave the meeting

This is what happened to me. But obviously, I didn’t leave. I wanted to hear the next part of the meeting: those that disagreed. The rebels. The misfits. The vigilantes. The ones ready for the heated debate.

Turns out, it was much more civil and less dramatic than I expected/hoped. If they disagree with your valuation, you debate it out in a very calm and structured process, each sharing your POV for 2 mins, followed by a 1 min rebuttal.

There were various methodologies used in the debates. The most prominent valuation basis was to use sales comparisons, and it’s the one most well-received by the committee making the decision. Therefore, I’m also recommending it to my readers and providing a template to make it easy for you:

The second most used method was lease-based: value based on a multiple of rental income. The third was the most intriguing: socioeconomic-based. It was also the least well-received, likely because it’s the most subjective. Essentially, owners sharing the changes in the neighborhood that have occurred, such as higher crime, change in school zones, infrastructure divestments, etc. They’re valid points - they’re just harder to quantify.

Sometimes, you hear the triggering, yet famous line of your coworker that got caught off guard in a meeting… “Let’s take this offline.” Yep - the city has that power. They can hear arguments, but they are not required to render a verdict in the moment. This happened once when there was a mildly-heated argument over the difference in value for a tandem vs. deeded parking space. The committee takes away the notes and deliberates in closed session. The public doesn’t hear the final discussion, but it gets mailed to the owner.

That’s it. After a few weeks, you will receive your new notice in the mail. You will pay that amount, or get a refund check if you’ve already paid. The unfortunate part: this is only a one-year reduction and the city will re-evaluate the following year, usually based on their original assessed value.

My results

I did both options listed in Step 2 above (one for 2023 and one for 2024) using the sales-comparables based method. This successfully resulted in a $43,000 reduction for each year, which netted me a refund check of $845 per year:

Some cool math

I got curious and dug deeper after the hearing. I also took some data from friends and computed how the city values certain aspects of living and it’s fascinating and relatively precise. Here are some examples, limited to my part of SF:

I find this riveting. Would you pay $25K for a private balcony? Or, pay $44K to have a city skyline view? I know, it’s the ideal dinner conversation. Next time you see me, let’s nerd out about it!

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After my first post, the most common response was from people contemplating investing, but haven't yet taken the leap. So let’s pick up there. This post will not cover the HOW to get started. Stay tuned, that’s the next post! With that, let’s start with WHY I jumped into RE (real estate) investing.

Why I needed a side hustle?

It’s early 2017 - I’m midway through my stint at Google. It took about 12-18 months, but I was finally “comfortable” with the pace of my job. While I still enjoyed my role, I was now able to handle the day-to-day with less time and energy than when I started. What used to take me 50 hours now took 30 hours or less. For some of you, the pandemic has been a forcing function that has led to a similar result.

Looking back, there was a stretch of time where I spent 10+ hours/week playing Super Smash Bros and table tennis. Absolutely no regrets, but needless to say, I had some bandwidth after feeling solid at work. Contributing force #1: excess time.

Another contributing force was constantly being surrounded by high-achievers who all seemed to have a side-gig. John, a superstar at work, was teaching in the evenings to those less fortunate. While Sally, who had a side-business advising clients on going mobile-first, was still scoring at least Exceeds Expectations on every performance review.

While the names are fictitious, the anecdotes (and the feeling of inferiority) were very much real. Everyone around me seemed to have a side hustle..all while still excelling at the almighty Google. Being content in my role felt like a societal penalty: “if I’m not doing multiple things, then I’m being complacent” I thought; and complacency was akin to getting left behind. We could dedicate an entire article on this paradigm. But for now, contributing force #2: pressure of inferiority.

But why real estate?

In exploring different resource groups to see the side hustles of others, I came across the concept of FIRE (Financially Independent, Retire Early). It was all the rage. It was sexy. It was the thing. Have a side hustle > build passive income > be free. Seemed simple. After all, who wants to work forever? A majority of the FIRE posts were in the real estate arena, so I narrowed further research there.

I learned RE has 4 primary ways of income generation. Most people understand the first 2 well:

1. Cash flow - rent, less expenses

2. Appreciation - increasing property value over time

3. Amortization - paying down loan principal each month (either by you or a tenant)

4. Tax Savings - more favorable tax treatment vs. “ordinary” income (i.e. a W2 job)

With 4 different routes to growth, this industry felt manageable. Even if one didn’t work out, I had 3 others, right? Force #3: multiple growth levers.

Diversification

Much of my wealth at the time was my salary, 401K, and RSUs - all of which were directly related to Google. Real estate provided a nice excuse for diversification; if things went south at Google, or broadly in tech, I was highly exposed to that downturn, and that scared me. Doing a side hustle within the tech or ad space felt like it wasn’t removed/uncorrelated enough. Force #4: diversification.

I’m Broke / Leverage

I didn’t have much money, and what I did have was either invested in the S&P or in a savings account, generating 2% APY (remember those days?). When I ran numbers for various side hustles, it was clear that using my money alone to achieve FIRE would take either 1) a long time or 2) a lot of work. And I was lazy. My co-workers were not, and I didn’t want to be. But I was lazy. And I wanted to continue playing Super Smash Bros. I needed to accomplish this FIRE goal quickly and with little effort - after all, I’m a millennial and don’t know the word “patience.”

Further research taught me that an accelerant in real estate was using other people’s (or a bank’s) money to compound your investment: leverage. Take an example investor buying a house for $100,000. They can use leverage by only putting a 10% ($10K) downpayment and loaning 90% ($90K) from the bank. This is a 9:1 ratio: every $1 the investor puts in, the bank put in $9. But the investor still reaps benefits at full value:

A less aggressive use of leverage would be a 50% downpayment, bringing the ratio down to 1:1. Conversely, an extremely aggressive use of leverage would be to buy with a low downpayment, wait a few years, pull excess money out (using the appreciation) to fund yet another house..and then repeating every few years. Each side of the spectrum has its own risk and reward calculation. Here’s how I charted my 3 options in my head:

As you can see, even with half the appreciation vs. the S&P (and relying only on the 2nd, “appreciation” growth lever), investing in RE can be powerful given the catalyst of leverage. Caution: just as leverage can amplify gains, it can also exacerbate losses, so it’s imperative to manage your risk wisely. The above chart sounds beautiful on paper, but there’s much more behind the scenes than the simplistic example results above. Force #5: access to leverage.

Is it right for you?

Turning to you. The biggest concern I’ve heard from apprehensive folks are centered around risk, time, and money. Here’s how I think about some of the questions I’ve received. Drop a line if you have another one you want me to comment on:

“I’m going to buy and it’ll crash / the(my) market is too hot / is right now the right time?”

I’ve learned the hard way that timing any market is very difficult. I’ve missed out on many investments by mistiming/waiting. Broader analysis also shows that time-in-market generally outpaces timing-the-market. Here’s the simulated S&P 500 returns of 5 hypothetical individuals (with different investment timing strategies) over the last 20 years. Surprised?

Unfortunately, many people get stuck in the 5th bucket, just waiting for the perfect moment. Even the worst timers (4th bucket) yielded triple the returns vs. those that waited (5th bucket). Despite hearing or knowing this, I know you’ll still try to time your RE investment - it’s human nature. So here’s another way of thinking. When most people think about real estate cycles, they envision this:

In reality, however, ‘real estate’ is actually an overlay of multiple, usually staggered sectors, like this:

At any given time, there is a sector that is rising, while another is in decline. Look no further than COVID to see this in action. Given desired physical flexibility, liquidity needs, and pent-up consumer travel demand, short and medium term rentals (Airbnb, VRBO, etc) have been on fire! Conversely, supply chain disruption brought prohibitively high lumbar cost, making Fix-n-Flip a less lucrative proposition lately. So if you’re going to time it (again, please don’t), at least do some research to find the sector that is temporarily undervalued and likely to trend back up.

“I don’t have that much time. This will take forever”

Most time needed in RE investing is front-loaded. While it takes time to build the machine, a well built machine runs for a while..and usually runs passively (this is why RE is classified as “passive income”).

Even then, you can further reduce your time if you’re willing to allows others to step in; in most cases, it’s a simple tradeoff: time for margin. For example, “I don’t have time to:

• ..go to open houses” > give an agent notes on what you want to see

• ..deal with tenants” > hire a property manager

• ..keep all those records” > find a bookkeeper

When done correctly, managing a RE portfolio offers a similar development opportunity for a key trait of Product Managers: leading without authority. While I used to hate this idea, I’ve come to respect this challenge and now see RE investing as an opportunity to grow those muscles outside of work (hint at a future article idea..).

“I don’t have enough money”

As with time, you can decide how much money to invest. Here are some briefly-summarized alternatives to traditional RE investing:

1. House-hacking: Buying a larger-than-needed building (duplex, triplex, etc), living in one unit, renting out the rest. Here, you’ll capture the benefits of a significantly lower downpayment (as low as 3.5%) and mortgage rate, while still earning rent from the other unit(s).

2. Wholesaling: Getting an offer accepted on a house at below market value (i.e. $300K). Within your closing window, reassigning that contract to another buyer at retail price ($330K) before closing. Essentially, arbitraging the wholesale and retail markets.

3. REITs: Real Estate Investment Trusts. Effectively, an index fund with specific focused exposure in real estate.

4. Fix-n-Flip: Finding a house in need of rehab, getting a short-term (high-rate) construction loan to fund it, fixing it up, and selling it.

5. Syndicate: An experienced operator collects investments from individuals, pools them together, and develops a large-scale project. Upon completion, investors get a share of the rent or sale price. Here’s an example deck.

6. Fractional ownership: Pooling ownership with hundreds or thousands of others. Allows you to invest less, while still getting the exposure. Examples include Fundrise and Crowdstreet.

There are resources online specifically addressing how to get into RE with low or no money down (example book that I have not read). Tread carefully: sometimes, less money invested adds a higher-than-necessary risk for first-time RE investors.

“What if I need the liquidity quickly?”

Taking a step back, when those new to investing ask me, this is the 3 stages of life I share (you know I love frameworks!):

So my first response to those who ask me about liquidity needs is: do you have your rainy day account (Act 2) funded? If not, spend some time intentionally building one. Once complete, ask yourself, why do you need additional, immediate liquidity? For most people, it’s a comfort thing. So I simply suggest adding more to that rainy day account before jumping into RE investing (and Act 3, in general).

For those who are on Act 3, RE does offer liquidity. Not nearly as much as your stocks, which can be sold and settled within a few days. But your equity in a rental property can also be tapped into (refi, HELOCs, personal loans). In fact, doing so can be less costly, as the interest rate of these products is much lower than capital gains tax liability from selling stock.

However, tapping into your RE equity takes time (30 - 45 days). For most readers here though, the liquidity needs for large expenses can be planned (having a child, a home remodel, a car purchase, etc). So with RE, you still have liquidity: it just requires a little more advance planning.

Some homework

I try to keep these articles actionable. Here are some next steps I’d recommend for anyone that is “on the fence” and still deciding:

1. Stop beating yourself up. Most of you have priorities: family, health, job, etc. Understand that you not having taken the leap already is not because you’re not smart enough. You also haven’t missed some big opportunity either (real estate is not the next Dogecoin). Don’t skip this step. If you do, you may prematurely jump into an opportunity out of FOMO rather than taking a measured approach.

2. Decide your why? Is it for passive income? Is it to gain some experience? Is it a fun side project to occupy your mind from your full-time job? Your answer will directly dictate your involvement and narrow the appropriate type of investment (more on this in the next article).

3. Make a goal, share that goal. If you’re still interested, what do you want to do next? Keep it micro and time box it. For example, “By June, I want to read one book on managing rentals from out of state.” Share your goal with a friend, partner, or colleague (or even drop a comment below). Sharing out loud makes you subconsciously more accountable and you’ll have an innate fear of letting others/yourself down - use that pressure to your advantage.

If you’re finding this valuable, subscribe and stay tuned. My next article will specifically focus on how to get started in RE investing. If you have another topic of interest, let me know in the comments below, or make a request here!

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For many, the thought of buying a rental property is daunting. The most common reason I hear is the fear of having a nightmare tenant. So let’s start there. I've dedicated my first post to sharing my worst tenant story, the lessons I learned, and how you can avoid this nightmare.

The Backstory

It’s Winter of 2017. I’m midway through my career at Google. I spent the last year learning about real estate investing primarily from colleagues, podcasts, books, and mentors. I finally took the plunge into investing earlier this year and purchased two rental properties in Atlanta. Things were going well with both of them, so I figured, why not go for #3?

I found a great property in a C-class neighborhood in south Atlanta. While the location wasn’t favorable, the monthly cash-flow financials were solid - and that was my primary goal at the time. I made an offer on the property and proceeded with the due diligence. Here are the simplified monthly financials I was able to verify:

Since I was self-managing at the time, I was making an extra $145 per month (stay tuned for a future post on self-managing versus hiring a property manager). This deal felt solid - so I decided to pursue it. After all, this ROI didn’t even include the appreciation and tax benefits I would be reaping. Let’s do this!

The Nightmare

The purchase and transition went smoothly for the first several months. Rents were always on time and expenses within the forecast. This was a cash cow...or so I thought! Just after the 1 year mark, the tenant missed their rent payment. No big deal, I’ve read about this. It shouldn’t be that hard right? Wrong.

I scheduled a call for the following week with the tenant. During our call, she told me that her husband was on Social Security and that their check was late. No problem. After all, who isn’t familiar with snail mail? And also, she’s always paid on time, so I should cut her some slack, right? So I did. Then, two weeks later: still no rent (and no update). When the next month’s rent was coming up, a different reason came up. The conversation started to loop. Something didn’t feel right. After a few more conversations, I could feel the cycle repeating. I was being suckered, and I didn’t even see it. I had lost 2.5 months of rent before I took a firm stand.

I mustered the courage to text her: “If rent is not paid within the next 2 weeks, I will be filing for eviction.” Her response baffled me: “hah ok.” But that’s OK - I had it on the record (for the record, more than this SMS is required to actually be considered “on the record” in a court of law).

I began the eviction proceedings. I filed, refiled, and refiled again. Constantly, my documents were rejected for various reasons (mostly for unknown, procedural oversights - i.e. not filling out the middle name of the tenant). Finally, after another month, I hired an attorney, and we started the process over. In total, four months had passed from my initial outreach to the eviction being ordered by the judge. Then, another 3 weeks to get the eviction scheduled. But finally, some reprieve - scheduling a date means it will soon be over. Or so I thought..

I was asked explicitly to not let the tenant know about the eviction date; this ensures the safety of the officers that carry out the eviction order. So you can imagine her surprise when the officer showed up on her doorstep and forced her to leave immediately.

Needless to say, she was pissed off. Imagine, all of her personal items (and her family) were forcibly removed from the premises. Yes, she didn’t pay rent for months, but even then, the image of all of her items scattered across the driveway in the pouring rain is an image I remember vividly. But this wasn’t the end. She called me and threatened boldly, “I’m going to get you back. Just watch.” I immediately increased security measures (notified authorities, upgraded locks, installed cameras, etc).

The very next day, I saw it - she made good on her threat. She busted every room in with a shovel, broke multiple windows, vandalized every wall, stole the appliances, and destroyed the cameras.

I was horrified. This type of damage wasn’t even comprehensible to me as a possibility. After all, the tenant was aware of the eviction proceedings (she even showed up to court and heard the judge order the eviction). How could she possibly do this to me after all the leeway I gave her??

This was supposed to be a great week: it was my birthday. And one of my close friends just got engaged, so I was extra excited to celebrate. Instead, I was in Mountain View on the phone with the police, insurance companies, and my family. I was emotional. I was sad. Imposter syndrome set in: I questioned if I was qualified to be “an investor.” I was all but certain my real estate investing days were over.

It didn’t help how unfazed others around me were in the moment. The insurance agent documented their progress and didn’t even negotiate to cover the damages. The police officer also didn’t miss his opportunity to minimize the situation, assuring me this “happens all the time.” I asked him if he’s aware of the NFG gang in the Atlanta area as pictured above. His coy response was probably the only thing that made me smile that evening: “Sir, I believe that is the youth slang for No F***s Given.” Cool.

In the end, the process took nearly 8 months and beyond the emotional toll, this experience carried a large financial burden. Here’s how things ended up:

The Recovery

After pulling myself out of a pretty traumatic emotional hole, I was able to slowly move past the situation. It was time to begin the renovation work. Fortunately, my brother ran point on the project, so I was able to keep a close eye along the way.

This was his first project, and he knocked it out of the park. Here’s how the same unit pictured above looked after renovation:

When all was said and done, I was able to place a new tenant, sell the property at a sizable gain, and defer taxes via a commonly known tax loophole called “1031 Exchange”. Even more important, though, are the dozens of lessons I learned. And most important, with the support of family, friends, and colleagues, I was able to pick myself up and continue investing. Here are the top lessons from this specific experience that can help you avoid the same misfortune:

1. Match your insurance to your risk tolerance. There are two types of rental insurance coverage: RCV (replacement cost value) and ACV (actual cash value). RCV (more expensive) covers the cost to repair the property; whereas ACV includes depreciation, leaving you with an adjusted (lower) amount. Back then, I was willing to risk this event to save a few hundred dollars each month. Now, I am not.

2. Evictions are immensely expensive. Mitigating this risk starts with the proper vetting of the tenant. This is crucial - here’s a good article that outlines how to screen tenants to optimize your protection. If it comes to missed rent, start the eviction process early and communicate clearly throughout. In the worst case, try a "cash for keys" strategy where you pay for a peaceful move out - trust me, it’ll be less costly in the end.

3. Start the eviction process immediately when rent is missed. If rent gets paid after the process has started, it’s very easy to cancel (and a fraction of the cost vs. starting too late). It also sets a good precedent to the tenant. If you’re feeling too empathetic like I was, you can let them know that you’re required to do this otherwise you may come off as discriminating and violating Fair Housing laws (credit to Jay Pillai and Kevin Wood for this suggestion).

4. Bring in professionals for these black swan events. This process took too long (~8 months). Not only did I have a full time job, but also I wasn’t well versed in procedure. And learning the bare minimum I needed to proceed was not worth the cost, time, or energy. Once I hired the attorney, the process was streamlined and ended up costing less than the additional month (in terms of lost rent) I had spent trying myself.

This is my first time writing. If you enjoyed it, consider subscribing. For now, I’ve committed to writing once per quarter. I’m always open to engaging on real estate. And if you have a specific story or topic of interest, let me know!