This is the first episode where I interview a book contributor who wrote a chapter for "The 2020 Guide to Denver Real Estate Investing" book. The goal for this podcast series is to check in with them to have them recap their real estate investing strategies and how it has changed since the COVID pandemic. Terrance Doyle joined the conversation to ask questions as well.
My guest for this episode is Joe Massey. Joe is a Denver real estate investor who has worked as a lender in the mortgage industry since 2002. He uses the income he earns from working full time as a lender to invest in real estate. Due to the volatile nature of the commission-based mortgage industry, Joe is more conservative in his real estate investments and willing to accept a lower return for less risk. He and his wife have a long term goal of achieving $20,000/month of passive income from their pool of investments which includes real estate, stocks, bonds, annuities, social security, etc. They hope to achieve this monthly income goal without drawing on principal.
Joe has three real estate investment criteria for Denver properties
- Inside C470 loop
- 7% cap rate or better
- Turnkey: 5K worth of work or less (paint, carpet, etc.)
He also looks for condos in HOAs, because he can get really good rents compared to the purchase price, and they are really easy to manage. The pandemic has not changed his real estate investing strategy which he views as a 20 year buy-and-hold strategy. He is still buying properties if they fit his criteria.
One way he diversifies his risk is to allocate a percentage of his monthly income to other investments besides real estate.
- 10% savings, 10% 401K, 5% stocks and bonds in managed account, remaining amount goes into fund to invest in re. When that builds up to certain point where have enough for down payment, buy next re property
- Have life insurance: safe; won’t go down in value; not high returns
- Sees roughly 7-10% returns a year for portfolio of investments
- Rule of 72: if make 7% on your money, it doubles every 10 years
- Takes 20-40 years to get rich quick
Joe is good with buying “regular” deals and tries to buy one or two a year. He doesn’t have the time to find “exceptional” deals with amazing cap rates, because he works full-time as a mortgage lender.
He and his wife use their HELOC to buy properties rather than taking out loans. This way they can purchase the property with cash and see their interest payments decrease as they pay down their principal with rent payments. Their current variable rate is in the 4.5-5% range. The podcast goes into more detail on the benefits and pitfalls to avoid when using a HELOC to purchase rental property.
Connect with Joe Massey
Submit a Chapter for the 2021 Guide to Denver Real Estate Investing Strategies Book
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Grab a copy of the 2020 Guide to Denver Investing Strategies book for yourself.