The Stessa Investor Stories are monthly spotlights about real estate investors who are building and scaling up their businesses. In this month’s interview, Tyler Silverman shares how he’s growing his portfolio in multiple markets.
Real estate investor Tyler Silverman currently owns 4 rental units in Colorado and Wisconsin. Although he’s only been investing for a few years, Tyler has quickly learned how to successfully own and operate rental properties in different markets.
Tyler took time out of his busy schedule to talk with us about how he got started in real estate, and how keeping emotion out of his business helps him stay focused on the best deals that make financial sense.
1. Tell us about your real estate background – how and why you go into it, how long you’ve been doing it, and how it fits into your life
Answer: Real estate has been a part of my life since childhood, because my mom is a real estate agent. But until a few years ago I wasn’t really focused on investing in real estate and generating passive income. I bought a condo for myself back in 2015 and my only goal was to pay off the mortgage as quickly as possible so I could live “rent free”.
A couple of years ago my employer asked me to travel more, and at one point I was going to be gone for 7 months. Rather than paying the mortgage on a vacant place, I decided to rent my condo out. I fixed the condo up and found a great tenant who enjoyed the space.
I realized I could own real estate, generate rental income, and still travel for my full-time job. That’s when my “Aha” moment hit, and my real estate investing journey began.
2. What does your real estate investment portfolio currently look like?
Answer: I currently own four units with a total market value of about $820,000. There’s a condo in Boulder, a duplex in Milwaukee, and a condo in Denver that I partnered with my parents on.
3. Describe your real estate investment strategy for us – where & what types of property do you invest in, and why you choose the properties you do.
Answer: My goal is to acquire another 4 or 5 multifamily properties. Once I have a total of 7 or 8 properties in my portfolio, I’ll be able to aggressively pay down the mortgage balances and “free cash flow” except for normal operating expenses like repairs, maintenance, and property taxes.
The two markets I like right now are Milwaukee and Boulder/Denver. Milwaukee is great for cash-flow properties. Denver and Boulder are good for rehabs and fix-and-flips, but you have to keep a close eye on the ROI because the market is so competitive and it’s easy to accidentally overpay. I’m also researching other real estate markets in the Midwest that offer the same investment potential that Milwaukee does.
4. Why did you start using Stessa?
Answer: Just after I bought my duplex in Milwaukee, I was listening to a real estate podcast and heard an advertisement for Stessa. The timing was perfect, and I took advantage of Stessa’s free rental property financial management software to manage the duplex and my condos in Colorado.
You can upload photos and receipts for each property and generate P&Ls for each individual property and your entire real estate portfolio. When it’s time to pay taxes, you can easily create the necessary reports and email them to your accountant or CPA. Stessa is a no-brainer to use, and I honestly can’t understand why any real estate investor would use an old fashioned spreadsheet when Stessa is free.
5. How do you use Stessa to track and manage your properties?
Answer:I use Stessa to book income and expenses to the correct properties in my portfolio. Their online rental property management system is great because everything is clearly laid out. I can tell at a glance exactly how each property is performing, so there’s no guesswork or emotion involved.
6. What’s been your best experience with real estate investing so far?
Answer: My best experience so far has been the rental duplex in Milwaukee because it forced me to learn how to invest outside of my home market. Everything from researching the area and understanding how people live in a different place, to making brand new business connections with brokers, lenders, and repair people.
Of course, there were some bumps along the way. But it’s been very smooth overall, and I realize now how out-of-state investing will help me reach my personal investment goals.
7. What’s the biggest mistake you’ve made that you’d like to help other investors avoid?
Answer: I’ve made two big mistakes. The first was getting too emotionally involved in a deal. The second was convincing myself that I could self-property manage from 900 miles away.
I was trying to buy a triplex in Milwaukee and went through several rounds of counteroffers. Next thing I knew I was down to an ROI of 2% – 3%. And that’s before factoring in items like vacancy, rehab costs and routine maintenance. Fortunately, I came to my senses in time and pulled out of the deal before I bought something that would end up being a big mistake.
Currently, I own a duplex in Milwaukee. When I first purchased it, I thought I could manage it myself even though I lived 900 miles away. Two weeks after I closed escrow the furnace broke down in the middle of winter in Wisconsin. The tenant’s family of six is panicking and I’m panicking right along with them. Fortunately, the repair was made quickly.
But there were always problems after that, such as the rent being paid late and the tenant running up extra HOA fees that hurt my cash flow. I realized the friends and favors I had in Milwaukee weren’t going to last forever. So, I hired a great local property management company and now turnover is very low and the rents are higher, and everything runs smooth.
8. What is the one thing you know now that you wish you knew when you started investing?
Answer: Tracking my savings rate and net worth is the path to financial freedom. Had I known that when I was younger, I could have started investing in rental real estate much sooner than I did. But the fact is that everything happens for a reason, and it’s never too late to start building a real estate portfolio.
9. What’s your favorite book on real estate investing?
Answer: It’s probably a cliché answer, but for me it was Rich Dad, Poor Dad by Robert Kiyosaki. The book opened by eyes to the idea of owning things that basically pay you to own them by generating revenue like rental real estate does. I first read it as a kid, then again last year after I started investing in real estate, and that’s when the concept of financial literacy really hit home.
10. What’s your favorite thing about Stessa?
Answer: The drop-down menus for entering income and expenses and links for uploading receipts and documents free up an incredible amount of time. I know a lot of people use spreadsheets. But with a free cloud-based rental property financial management platform like Stessa, there’s no reason to waste time building your own system. Stessa lets me focus on scaling my business and adding to my portfolio.
Staying focused on real estate investing
Many beginning real estate investors are overly-optimistic, and Tyler was no exception. But in just a few short years, he’s built a multi-property, multi-market portfolio of rental property. Tyler keeps emotion out of his business and uses the free rental property financial software from Stessa to scale up his portfolio and plan for the long term.
- Keep emotion out of the equation by focusing on financial fundamentals like cash flow and ROI
- Owning less than 10 rental properties can quickly lead to “free cash flow” and long term wealth
- Investing in multiple markets means having a successful real estate team in place
- Leveraging Stessa’s software to handle finances and reporting creates more time for scaling up and building a real estate investment portfolio