How (and WHY) One Pharmacist Got Started in Real Estate Investing
Pharmacist and real estate investor, Tanh Truong, shares how and why he got started in real estate investing early in his pharmacy career. Tanh talks about how he stays motivated, long-term and short-term goals, and some inspiration for new investors.
Today’s Guest
Tanh Truong is a pharmacist by day and investor by night. He graduated from the University of Cincinnati PharmD program in 2017 and has practiced as a community pharmacist for approximately three years. A thoroughbred of Cincinnati, he invests locally in high yielding assets and higher yielding relationships. Aside from investing, Tanh is a connoisseur of finance with a macro focus, an expert foodie, and a lover of self improvement books.
Summary
One of the keys to Tanh’s success has been his desire and drive to learn everything he can about the areas of real estate investing that interest him most – driving him to turn his car into a mobile classroom to optimize his learning time. He believes that a solid foundation of knowledge is critical to being successful. Tanh shares that bit of motivation for investors, noting that knowledge is power, but also increased knowledge will reduce your risk as it applies to real estate investing.
Tanh mentions that his early success is related to his early partnerships. Having a team around you, where you can look for resources, help, and share opportunities can be a great asset, particularly when you aren’t necessarily handy or mechanically inclined.
When asked about his motivations for investing, Tanh reveals that at the core of his ‘why’ is his personal happiness. He tells other investors that your why should be something not only that motivates you, but also drives you to get out of bed each morning and continue on the path to your goals.
Mentioned on the Show
- Real Estate RPh
- Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not! by Robert T. Kiyosaki
- Bigger Pockets
- Bigger Pockets Forums
- Bigger Pockets Bookstore
- MLS Multiple Listing Search
- The 12 Week Year: Get More Done in 12 Weeks than Others Do in 12 Months by Brian P. Moran and Michael Lennington
- The Book on Managing Rental Properties: Find, Screen, and Manage Tenants with Fewer Headaches and Maximum Profits by Heather and Brandon Turner
- Bigger Pockets Real Estate Podcast
- Buy, Rehab, Rent, Refinance, Repeat by David Greene
- Connect with Tanh Truong on Facebook
- Follow Tanh Truong on Instagram @gin_n_tanhic
- Email Tanh Truong: [email protected]
- YFP Real Estate Investing
- Join the YFP Real Estate Investing Facebook Group
Episode Transcript
Nate Hedrick: Hey, David, how’s it going?
David Bright: Hey, good, thanks. How are you doing, man?
Nate Hedrick: I’m good. It has been a crazy, crazy week already, but it’s a good one.
David Bright: Yeah, you had that listing go live right about the time last week’s podcast came out, so I was really curious to hear in this hot market like what kind of traffic you’re seeing. How’s all that looking?
Nate Hedrick: Yeah. We had quite a bit of traffic. It’s actually, it’s a condo, which is not nearly as hot as a house, like a single family home. So that’s actually helped a little bit. I think my seller actually got to be in her house a little bit, which was nice, instead of just like back-to-back-to-back showings and you have to go hang out at Starbucks all day. So she’s — we’re getting a lot of activity, and I got word today that we’re probably going to get at least one or two offers coming in here pretty soon. So fingers crossed on that.
David Bright: Nice. Very nice.
Nate Hedrick: Yeah. And I would ask how you’ve been or what you’ve been up to, but I feel like we’ve been on the phone a lot recently with a couple of things, so for the listeners’ benefit, what’s been going on with you, David?
David Bright: Yeah, for sure. No, I think of of the few things we haven’t probably talked about is I think I mentioned last week on the podcast is we’ve been trying to figure out what to do about potentially selling a rental property that we’ve had for awhile, just trying to think through all the like it’s a hot market, all those kind of things. So we’ve even been doing some brainstorming lately, trying to expand on that. We’ve been trying to find a way that we could sell a rental property to an existing tenant even if we have a tenant that might be interested because it really seems like I just keep trying to find that win-win of if there’s something for that tenant where they can capitalize on the low mortgage rates and all this stuff that’s going on now. It’s a hot market. If they already have a house that they like, maybe that could be a fit. So still trying to figure all that out.
Nate Hedrick: I love when you can build that relationship with tenants. I actually have a tenant right now of mine that I’m helping — that are local — and I’m helping them buy their first house. So it’s really cool. They’ve been renting from me for about two years, and they came to me a couple months ago and they said, “Hey, like about the lease renewal. Can you actually represent us to buy a house?” So I love when you can take that tenant and create that win-win for everybody. It’s been fun, so that’s awesome.
David Bright: Yeah, I’m excited to jump into this week’s podcast too. This was really a fun one, especially because, I mean, one, it was the first one that we recorded, right? Like we didn’t necessarily record all of these in sequence of how they’re coming out. So this is the first one we recorded, which was a lot of fun kind of looking back on it now and definitely some motivating content in there.
Nate Hedrick: Yeah, and Tanh is someone that I’ve known for a long time, actually. Back when I first getting started in this whole thing, Tanh was nice enough to actually write an article for me. He was ahead of me in the investing game, just like Jared when I first met Jared, ahead of me in the investing game, was interested I was a pharmacist trying to help other pharmacists, and actually wrote an article for Real Estate RPh. We’ve been connected ever since and just kind of been following what he’s been up to, and so we knew we wanted to have him on the show. Again, he was an easy first guest for me because I had already known him and spoke with him before, but I’ll ask the audience to give us a little grace since this was our first interview. It’s good by all stretches, but it just — we were still getting our feet wet, David and I barely know what we’re doing at this point. So this is evidence of that.
David Bright: Yeah, Tanh was great. Like for sure. And the other great here is major thanks to the YFP editing team for making us sound way better than we actually are. So yeah, for sure.
Nate Hedrick: Yes. Huge shoutout to the YFP editing team. This would be a floundering unsuccess with them, so thank you. And I guess since we should talk about the actual interview and things to mention, so for those that don’t know or are just listening to this for the first time, so Tanh is actually graduated from the University of Cincinnati, he is a pharmacist there, and again, he’s been investing in the Cincinnati area for a little while now. And what I like about Tanh especially is that he gives some great advice in this interview about how to get started but also where he’s going next. And so it’s a great look at what it can be like to jump in as a real estate investor and say, ‘OK, I got my first deal,’ but then how you can take that first deal, turn it into a second, a third, and beyond. And so I think he’s a really good representative of what that looks like to go from start to actually diving into the journey of real estate investing.
David Bright: Yeah, and I think it’s really encouraging too to see that he was able to start super early in his pharmacy career. So if there’s particularly any pharmacy students that are listening, like it’s just exciting that this doesn’t have to be something that you wait until you’re in your 40s or 50s to get started at, but he got started very, very quickly. So I think that’s really motivating. He also drops some motivating nuggets in there right at the end in our final infusion question. So please stay tuned for that right at the end.
Nate Hedrick: Good stuff. Alright, well, we’ll leave it there and we’ll take it to the interview.
Nate Hedrick: Hey, Tanh, thanks for joining us.
Tanh Truong: Thanks, guys. I’m super, super humbled, super, super — I don’t want to say nervous, but I am excited for this. This is definitely big for me.
David Bright: Love it.
Nate Hedrick: We’re really excited to have you. This is cool. So Tanh, we want to get started here, you know, why don’t you tell us a little bit about your pharmacy story. I know this is a real estate podcast, like it always is, but we want to make sure we focus on the pharmacy side too. So maybe jump in, start off with your pharmacy story for me.
Tanh Truong: Yeah, absolutely. So for those who don’t know, I’m located in Cincinnati, Ohio, and I went to college at the University of Cincinnati. I did two years of undergraduate there and went to pharmacy school, graduated in 2017. During my schooling, I interned at Kroger Pharmacy, which is a local retail chain here in Cincinnati, Ohio, and I practiced with Kroger for about three years or so. I dialed back from the pharmacy a little bit. So I’m kind of a part-time pharmacist, not necessarily doing the whole 40-hour work week, focusing a lot more of my time now on the real estate side.
Nate Hedrick: Nice, wow. And again, with a 2017 graduation, that’s impressive to be able to move to that already. So wow.
Tanh Truong: Yes, sir. Thank you.
David Bright: So that leads into our second question, and so give us an overview of how you got started in real estate and kind of how that morphed from where you got started into what you’re doing today.
Tanh Truong: I’ve always had an interest in finance. So anything that had anything related to finance, I had my eyes on it. I was reading it, I was self-educating myself. And so with real estate, it kind of comes back to my why, right? My why is financial freedom. I want that freedom because it allows me to take my time back from that 40-hour work week. It allows me to not rent my time out anymore and actually do things that I really, really love to do, which is I love having conversations with people, I love traveling, I love eating new things, trying new stuff. So that, for me, was a big, big vision board, right? And then so with real estate, it just gives you a vehicle to be able to generate that passive income to take over your W2 income so that once again, you can get back that freedom. So to answer your question of how, the education piece was big. You know, I was a sponge, I was looking at — I was getting my hands on all these books that I could, spending hours and hours reading, looking online, listening to podcasts. So being a sponge at the beginning really, really helped gain that initial knowledge to make that jump.
Nate Hedrick: That’s great. I mean, again, I think so many people struggle with that how. You know, we ask that question on every podcast, how you got started. But I think the how is something that we really want to dive into today, especially with you getting to that initial stuff because I know, again, it’s fairly recent that you’ve gotten started. But you’ve exploded since then. So I think that how is our big focus today. So you mentioned some books and some podcasts, you know, are there resources that really felt like you — that propelled you that next step? Again, I look at my own journey and for example, reading “Rich Dad Poor Dad” just set me on that new level of mindset. Are there things that you remember at that stage that kind of bumped you up to that next level?
Tanh Truong: Yeah, absolutely. So “Rich Dad Poor Dad” I would 100% recommend. That thing, that book right there, that little tiny book, that small read is just a mindset shift that just has you mindblown. Like everything that I’ve known up until this point is just wrong. Right?
Nate Hedrick: Right. Why did no one teach me this?
Tanh Truong: Right, right, right. So I would say Bigger Pockets is a huge, huge resource. The website alone has just a plethora of information, their forms are very informative, their books — I would say their books in their bookstore are very introductory level. They’re very easy to read, they’re not something that you have to have like a finance degree to understand. For me, it’s kind of re-engineering yourself. So I commuted to school and to work and to all that and whatnot. So during my car rides, I kind of re-engineered my car into a learning environment. So — and I have an old car, so it’s not something that’s Bluetooth-enabled or anything, so I bought this little magnet, put my phone up, I have earphones that I connected to my phone.
Nate Hedrick: That’s awesome.
Tanh Truong: And I would listen to podcasts on every car ride, no radio, and to an extent, it’s kind of dangerous almost because you’re listening to these podcasts and it’s giving you just a ton of information. Great knowledge, right? And at the same time, I’m like, I’m trying to write down all of these notes while I’m driving. So I’m not advocating for you guys to text while drive or taking notes while driving, but that is how I acquired so much knowledge in a short amount of time.
Nate Hedrick: That’s fantastic. I love it. I’m just picturing you driving down the road with this like setup, this audio learning environment. I love it. And for those that don’t know, I guess, our history together actually goes a fair bit back. You wrote an article for my site back in 2018 when I started Real Estate RPh, and we’ve kind of been connecting ever since then. And at that time, you told me your first deal, I think at the time you wrote about that first deal a little bit, and you had partnered up with a classmate in pharmacy school and purchased a multifamily home. And so I think, again, there’s a lot of pieces there that I think would have intimidated people that you just dove into. And I love that, right? You know, partnering up sounds scary. What if things don’t work out? Multifamily home, I’ve never bought that before, what am I going to do? You know, all these things that I think a lot of people wouldn’t be able to do normally that you were able to do. So maybe you can tell me a little bit about that deal, you know, how you got there and what that looked like.
Tanh Truong: Yeah, sure. So let me go ahead and start with the partnership idea. So partnerships in general are pretty scary. It’s — they say it’s like a marriage. You’re marrying another person who hopefully you did a background check on them, hopefully you have their financial statements, hopefully they’re not a criminal, etc. But luckily, this classmate of mine shared a lot of similar interests, a lot of the same mindset, right? So we clicked pretty, pretty quickly. Our goals were also very, very similar. So we were educating ourselves, sharing all this information, and then we kind of jumped on the MLS and started looking for properties. What we were doing was we knew we wanted a lot of doors. So we were always looking for multifamily properties, small multifamily properties, because those you can still get a residential loan on. So that’s when we kind of found this duplex, which is Norwood, Ohio. It’s on the east side of Cincinnati. It’s in an area called — termed, I should say — The Path of Progress, which is where there’s demographics that are changing in a positive manner. So we found the duplex, it was listed for — if I remember correctly — the low $90,000s. So probably around $92,000. We negotiated it down to $88,000, which was what the purchase price was. So with loans like this for a rental investment, you typically have to put down about 25%. And me and my partner, being as frugal as we are, as good at saving as we are, the 25% down was relatively not challenging for us. 25% probably $22,000 or so, so that’s $11,000 apiece. At the time when were evaluating the property, looking at it, looking at rental comps in the area, on paper, it looked like it generated about a 15% return. So you know, we looked at it and thought, first investment, 15%, that looks pretty great. It’s probably better than what the market’s giving us, right? So that’s why we moved forward with it. So walking the property, looking at it, like I said, it was a duplex. One unit has two bedrooms, one bath. The downstairs unit had one bedroom, one bath. Aside from the cosmetic issues with the kitchens, everything else was pretty much rent-ready. They put new carpet in there, new paint, etc. So it looked like a really good deal as our first rental. So went through with it, got it, and for being our first investment, we wanted to do it so well, you know, just have everything be perfect, no hiccups, etc. So went a little bit overboard, and that’s a lesson that what I learned today should have — not necessarily costly, but I’d say more time consuming than not. So we took the cabinets off, we sanded them down, and we stained them. Made them look a little bit more appealing. We even purchased A/C window units for these guys. Set it up, installed it ourselves, got washer and dryers, installed those for them. And we thought if everything is great to begin with, we can command higher rent. And so that took probably another three weeks or so. Luckily, the bottom unit, we were able to rent out to a friend of ours who was looking to move in the area. And so after he was renting, he was moved in, we marketed the top unit. So by marketing it, we just put out a Facebook ad, a Craigslist ad, and went on like Zillow or Trulia and just listed it on there. And so within probably another week or so, we got a renter. And luckily, it was during a time where people were moving, you know, it wasn’t like winter or anything. So all in all, total rents at the time, it was grossing $1,375 I’d say, around there. And we self-managed everything. So the returns on that investment at that time was actually really, really nice. It was around 33% or so cash-on-cash return, which was super awesome. But eventually, we offset that management to a property management company later down the road. And your returns are still 20%+ and it’s as of today, it’s bringing in around $200 a door in cash.
Nate Hedrick: Wow, that’s amazing.
David Bright: No, I love it. There’s a few terms in there that I would love to dig in a little bit on because you brought up some really great points, and I want to make sure that everyone’s catching a few things. So one is you started off by talking about how this was a residential loan, 25% down. What do you mean by residential loan? And where did you get 25%?
Tanh Truong: So in the financing world, there’s residential loans and commercial loans. So typically with commercial loans, they’re bigger properties. You’re looking at anything that’s five units and up or things like your retail strip malls or anything business-related is classified in that commercial loan type. So in the residential loan types, we’re looking at single family homes up to four-unit properties, so quads or four-plexes, as they say. And with the banks that we were working with, they as a rental investment, they typically require you to put down 25%. And some banks if you have a pre-existing relationship, they might do 20%. It just depends on how well you know them, how long they’ve worked with you. But in our case, this being our first one, the risk was higher on the bank’s side, so that’s why we had to put down the initial 25%.
David Bright: OK. You also mentioned the term cash-on-cash return. So talk me through that just a little bit too.
Tanh Truong: Sure. So cash-on-cash return is a metric that evaluates how well your money is doing in terms of an investment. So in this particular deal, we put down $22,000 as the initial investment. So that’s your investment, right? That’s what you put out of your pocket into the deal. Now you have to calculate how much money that investment is giving to you compared to that initial investment. So when I say our cash flow is $200 a door, so roughly we’re looking at $400 per month, $400 times 12, that $4,800 per year. Now you take that $4,800 per year of profit or cash flow, divide that by your initial investment, and that gives you your cash-on-cash return.
Nate Hedrick: Awesome. Powerful stuff.
David Bright: Love it. So the other thing that I’m hearing in your story is that you are very hands-on with this first deal. So talk about that for a minute if you could. Like what are the pros and cons of getting that hands-on? If you had it to do all over again on that first deal, would you have been that hands-on or would you have said like, this is just not for me?
Tanh Truong: So as a newbie, as someone who’s going in doing it for the very, very first time, it’s beneficial for you to do it hands-on because it lowers your cost in a lot of other ways. Now, for this particular deal, I think I would say that we were more on the lucky side considering that there wasn’t a lot of renovations or rehab that was required on the property. So you know, being two guys not necessarily super handy but handy enough to do all the small cosmetic work, I think that for us was a plus. Once again, I would say as starting out, you want to keep your costs as low as possible so that you still have a margin of safety to where your investment does not go underwater. So we put in very, very little equity, little cost for the cosmetic stuff, right? And I would say putting in that time hurt a little bit more than putting in that capital because at the time, we’re working 40 hours a week every day after work, on the weekends we’d run to the property, do something small, this and that. So all in all, the time aspect is what I would say is more valuable than the money aspect. So if I were to do it over, I think I would still do the same thing, depending on how much the costs are. For this example, I think we put in a few hundred dollars. I want to say maybe $700 total for all the cosmetic things and whatnot. Now, if I were to do it over again and somebody can get it done in a quarter of the time for say double the money, I think I would do that. They got it done quicker, it’s rented out quicker, and I didn’t have to waste four weeks.
David Bright: But I think that also speaks to your passion for it when you get started. You were willing to hustle, you were willing to work extra hours, long days, work your weekends, like all those things to get started. I think that that shines through when you talk about this too, that passion you have. So I’m imagining that that passion is causing you to work through some roadblocks and barriers. Like I have a feeling this isn’t all unicorns or rainbows the whole time. Like what — tell me about some of the roadblocks and barriers or like was there anything at all that was hard about this property, getting this going?
Tanh Truong: Absolutely. Absolutely. Nothing comes easy. So I would say with the education piece of what we were so involved in, you know, learning as much as we can with all this stuff, that helps a lot. But you can read all the books in the world and you would still not be able to handle some of these things. So one of the roadblocks I would say was that not being mechanically inclined. For example, probably a month, two months down the road of getting everything rented out, everybody’s in, settled, you’re thinking, oh man, this is great. I’m making some cash flow from these properties. But then you get that call, and it’s like, oh man, what’s going on? In this case, the water heater kind of went down. So we were like, oh, I don’t know how to work a water heater, I don’t know what to do. You know? So had to make some calls, call a few friends. Luckily, I had a network of people that were in the HVAC. So one of the issues with that is coordinating times to get the tenant the best quality service that they can get in a timely manner, right? So that I would say was one of the — self-managing in general I think is a headache when you’re at a 40-hour work week job and your tenants are calling so you can’t just up and leave your job, go over there, try to fix the water heater or the furnace. So I’d say, one, the roadblock is — or that first barrier was not knowing how to do some of these bigger things like for example, the water heater, or if the furnace went out, I wouldn’t know what to do. We would have to call a company if we didn’t have any friends in that industry. Now, the second roadblock or barrier I would say is not being able to train my tenants a certain way. So like, they could call you in the middle of the night, you know, at 12 o’clock in the morning and you have work at say 8 a.m., you know. So if I could have done it over with self-managing, I would lay down a set of criteria and say, “Hey, these are the calling hours. Call at 9-5. If it’s an emergency, call this number. If it’s something that you can do, if it’s under x amount of dollars of repairs, call this number.” Things like that that makes your life a little bit easier.
Nate Hedrick: That is so important. I found that with my own self-management. I managed one of my rentals that way, and if you don’t have those calling hours or have that system in place for your tenant, they will abuse the crap out of every other avenue to get that help.
Tanh Truong: Oh, yes.
Nate Hedrick: So setting up like, again, we talk about it all the time, right, people’s concern is that 2 a.m. toilet call. If you set it up so that they’re calling a plumber at 2 a.m., they won’t bother you. It’s exactly the same thing that would happen if I had my toilet break at 2 o’clock in the morning. I wouldn’t go fix it. I don’t know how to do that. I’m going to call a plumber. So setting that up in advance, you’re 100% right about that, Tanh. So I want to fast forward a little bit because I love this conversation, but I sense this passion, like David mentioned, and I can see just like how excited you are about this stuff. So tell me a little bit how things have gone on throughout the years now since you bought this first place. And has your why and how you’re doing all this changed? Or has it evolved in some way?
Tanh Truong: I think — I’ll take the easy one first. It’s the how.
Nate Hedrick: Sure.
Tanh Truong: The how has definitely not changed. Like I said, it’s a feeling that’s propelling me forward every day. If you have a strong enough why, that’s going to get you, that’s your MO. That gets you up in the morning, that gets you working throughout the day. So that still 100% the same. The why I would say has changed, yes, because there’s a lot of things that change in the market. The economy is changing every day. So we can’t do the same thing that we did back in 2018. A lot of my realtor friends or even investor friends now with properties that are on the MLS or the Multiple Listing Service, they’re going relatively quickly. As soon as they’re listed, they’re gone within a day, a couple hours even. And I heard a story where my friend listed a property, and it wasn’t gone relatively quickly. However, the offer prices went up significantly. It was like $40,000 over what the sellers were asking. It’s insane.
David Bright: Wow.
Tanh Truong: With that being said, you kind of get — I’m not saying there’s no deals on the MLS, you just have to dig a little bit more, you have to be a little bit more diligent with it. But it’s getting more competitive. So now you have to think creatively, how do you find deals that are off market? So what we’re doing is we’re tailoring to motivated, distressed sellers hopefully. So online, there’s these services where you can buy a list with property owners that are, say, in bankruptcy or pre-foreclosure or have some liens on them. So you can acquire this list for free if you’re willing to do the work on whatever county website that’s local to your area. But for the sake of time, if you are able to purchase these lists, they come relatively quickly. So we send out these postcards or even letters saying, “Hey, we’re buyers in the area. We look for rental properties in the area. We’re cash buyers, we can close relatively quickly. It’s a hassle-free purchase for you versus listing it with a real estate agent where a little bit more time-consuming and there’s that real estate realtor commission fee.” So that’s what we do, and our goal is to increase our own rental portfolio with that strategy. So we either can buy properties that are already rented and if it fits our cash-on-cash return or return on investment, we’ll try to keep those, right? But there’s another tactic that we found that has been really, really helpful in helping you scale your portfolio. So if anybody’s listening to Bigger Pockets, it’s Brandon Turner coined the term as BRRRR. So it’s BRRRR. So what do you do? You purchase the property, you rehab the property, you rent the property out, then you refinance later down the road, and you try to repeat that all over again. With our scenario, we look for properties that are severely, severely undervalued, needing a lot of that work, so that once we come in, renovate the property and rent it out, we can refinance from the bank so that we can acquire all that initial capital to do the same thing all over again. And the best part — if you get a good enough property — is that all your initial equity is out of that home. You forced equity into this property while also having a tenant that’s renting it out, creating that cash flow.
Nate Hedrick: Yeah, I love the BRRRR strategy. That’s awesome. And so you mentioned that you’re kind of going out and looking for these distressed properties and getting these deals off-market. Are you keeping all of them? Are you passing some along to other investors as a wholesaler? You know, how is that operating?
Tanh Truong: Looking at it creatively, there’s a lot of dispositions that you can do with these properties. So the ones that we — that fit our criteria obviously, we want to keep those for our own if they cash flow well, have a good return on investment, 100% keeping those in-house. Now, the properties that do not fit that criteria, there’s a lot of other disposition strategies that you can utilize, one being wholesale, two being wholetail, and three, you could flip the property if you like. So obviously there’s a lot of risk with any of those. The main thing that we did would be wholesaling the properties because that, to us, has less of a risk. You know, with wholesaling, you actually have to purchase a property to relist it. With flipping, you also have to purchase the property and when I say risk, it’s because you have holding costs when you’re holding these properties. And with a flip, you have to put in actually a lot more capital to get that property renovated and then sell it. Now, wholetailing, same thing. If you were to hold onto the property, one, you get that holding cost and two, what if no one purchases it? So now you have a property that’s not in let’s say our criteria that we would like to hold. So the wholesaling aspect for us worked the best because now you’re offsetting that contract to another end buyer. So it’s a win-win-win. The home seller is able to get rid of a property that they no longer want because of whatever distressed situation they’re in, we being the ones that get the property under contract are able to make a small fee from them, and three, now the end buyer can profit from this property in whatever shape or form that they decide to invest in.
David Bright: So I like that a lot. And you hit three terms in there that I want to also make sure we go over. You hit wholesaling, wholetailing, which I think is less discussed, and then flipping, which if you’ve watched TV during the pandemic, you’ve seen house flipping, right? So like walk me through — I think flipping is probably the more common — if you could particularly walk us through wholesaling and wholetailing and just kind of mechanically what goes on in those.
Tanh Truong: Sure. So let’s start with wholesaling. So wholesaling is like if you want to imagine going through your Costco or your Sam’s Club, they have things in bulk, right? They acquired all this product that hasn’t hit the retail level. So retail investors — or retail buyers, I should say, typically purchase properties that are on the MLS. As a wholesaler, our job is to identify why this seller needs to sell and what we can do to help the seller. So in that scenario, we do a lot of negotiating. There’s a little bit of sales that’s in there as well. So you learn about the seller, you get it under the property owner contract for whatever price that you’re able to. There’s a lot of knowledge that has to go in this wholesaling aspect too because you have to know what this property is truly worth fixed up market value. Now, you also have to know what the property is currently worth in its current condition with whatever renovations that it needs. So then with those two things of information, now you have to factor in what type of fee you would make being call it the middleman.
Nate Hedrick: Sure.
Tanh Truong: The other aspect of wholesaling is that you have to have a network of buyers. You have to know how to market the properties. So after you’ve had this conversation with the seller and you’re able to get it under contract for — let’s say for example $20,000. Under the contract, you’re able to market the property to — I don’t know, Craigslist, Facebook, your network of end buyers, right? So then from there, if let’s say Nate, you came up and you want to purchase this property for $30,000 or — I’m sorry, did I say it was $30,000 already? Let’s say it was $40,000.
Nate Hedrick: You said $20,000. You’re good.
Tanh Truong: OK. So nonetheless, it’s me as the one that did all the work initially, I get that $10,000 fee and Nate, I essentially assign my interest in that property to Nate as the end buyer. As a wholesaler, essentially I facilitated a transaction between the seller and the buyer, making a small fee for that transaction.
Nate Hedrick: And I get a great deal out of it, right? I still get that investment property, and you get to keep the $10,000 for basically finding that and bringing me that deal.
Tanh Truong: Absolutely. Now, wholetailing is a little bit different. So you’re essentially let’s say in the same scenario, I am under contract with this property for $20,000. I actually have to purchase the property to wholetail it. So I purchase the property, the ownership info goes from seller X to Tanh. Tanh owns the property. And what I do is because of all this information that I know about the property of what it’s worth at whatever level, I relist the property knowing that in this market, there’s going to be another buyer that’s going to buy it for higher than $20,000 with the hopes that that is true. But once again, there’s a risk in that.
Nate Hedrick: Sure.
Tanh Truong: If I was wrong, now I’m sitting on a property for $20,000, right, that all my money is tied up in that.
Nate Hedrick: Paying property taxes.
Tanh Truong: Exactly. Exactly. So yeah, you essentially purchase a property and just relist it, now hopefully with the goal of finding another buyer on the MLS. Now, flipping, like you said, is more common. A lot of people think when you’re investing in real estate, you’re generally just a flipper. So in this scenario, I would buy it from seller X, Tanh owns the property, now I put in x amount of dollars to get the property renovated to market value. And now once again, I would list it after all the renovations are complete, hoping to make a profit after the purchase price plus the renovation costs.
David Bright: So I think there’s a few things in there. One is that I’m hearing that wholesaling is how you’re facilitating an end buyer to buy a property that you found through your direct mail and other sources. Wholetailing is almost like flipping but without doing any of the like busting through a wall yourself or like any of that work that you see done. You’re giving someone else the opportunity to do some of that. But they get to find it on MLS or other sources like that.
Tanh Truong: Absolutely. You got it.
David Bright: With all that, this seems like definitely more advanced strategies. So is this — are you still learning all this through like your mobile classroom, like listening to it in your car? Or are you working with other investors? Or are you — what other ways are you kind of getting some of these advanced strategies.
Tanh Truong: Yes, knowledge is 100% how you get these ideas initially, and then it’s kind of having to do your own education on it, like figuring out how does all of this work? Like you hear a general idea, but you don’t have all the schematics of it, right? So you have to, like I said, do your own digging, look online, go to Bigger Pockets, learn all the schematics of it. That’s what we do. We try to learn everything that we can about a process so that we can make a transaction go as smoothly as possible. Even with that, going along other advanced strategies, it’s all about networking too because in the wholesaling side, with our first ever wholesale, we knew some of the information, we knew how it worked, etc., but once again, there’s always something that you don’t know. And luckily, on the networking side, we have friends that are wholesalers. So it’s with whatever roadblock or barrier that you’re seeing in that scenario, we can call them, they give us all this information graciously. So that helps out a lot. And I’ll kind of keep going with the networking side is that the more you’re networking, the more you’re learning from these people. Whatever they’re doing, you can kind of pick and choose what is relevant to what you’re doing and kind of implement those strategies as well. And now, for example, looking at the financing question earlier too, you know, you have your commercial loans, you have your residential loans. But then there’s another aspect of loaning too. People — there are investors out there that will loan you money on hard terms. So typically when you’re looking at a bank, today’s rates, you’re around 3%. Right? But for hard money loans, they’re a lot higher. They’re 9%, sometimes even up to 15%. So the aspect there is that if you have this knowledge of what you’re going to do with certain properties, that 9-15% is only there for a short amount of time. But it allows you to gain that leverage to do what you need to do with whatever investment that you’re doing.
Nate Hedrick: One of the things I like about your story is that you started off with something that feels really achievable for a new investor, like you went and you put 25% down on a conventional mortgage, you found a property on the MLS, and you did a few hundred dollars worth of nights and weekends work yourself. You’ve grown to this stage of wholesaling and wholetailing and hard money. Like definitely advanced concepts there. Can you speak to that kind of new investor for just a minute that’s feeling intimidated by like, oh my gosh, there’s so much in this world. I don’t even know how to get started. Like how would you help that new investor through this sense of intimidation?
Tanh Truong: Sure. This is after years and years of education, so — and I do apologize if I am rambling on a lot about it, scaring all these new investors. I would say if you are a new investor, learn as much as you can, for one. And try to find an avenue or road that you can drive in. So typically, as a new investor, I think the best route for a new investor is buy and hold because you’re looking at it in a long-term aspect. You’re not necessarily doing all these crazy strategies where you don’t understand fully what they are. So find whatever type of investment fits your MO and learn everything that you can about that certain investment. So now you could say flipping’s not for me. Wholesaling, I don’t even know what that is, that’s not for me. But let’s say buy-and-hold makes sense. You purchase a property, you get it rented out, and you keep on holding it for a long term, right? So if that is what fits your criteria, I would say, learn the processes behind making an offer on a home. Learn the processes of the buying process of a home. Like what happens after you put in an offer? What happens after an inspector comes in? What happens with the bank? Like how do I navigate all these things? Learn those things, stay in your lane, and be good at that one lane before you jump into all these other things. Don’t be like a dog seeing a squirrel, like ‘Oh that’s cool, I want to do that. I want to do this.’ Figure out what fits you the best. And then go from there.
Nate Hedrick: That’s great advice. I really appreciate it, Tanh. I’m really excited to see where you go next. In fact, I think before we get to our final infusion questions, I’d love to know what is next from you? What can our audience expect to see you doing in the next six months or six years?
Tanh Truong: Sure. So for me, goal setting is super big. There was a book that I read called “The 12-Week Year,” which kind of cuts your goals into 12 weeks at a time. It defines your year as 12 weeks. You’re no longer looking at 52 weeks, you’re no longer looking at 365 days. You’re focusing solely on those 12 weeks. So you could say I’m living my life a quarter mile at a time. For let’s say the next 12 weeks, my focuses will always be to increase our rental portfolio, increase that rental income to the point where we get to that financial freedom number. So that’s one part of my goal. The other part is generating x amount of revenue to get this venture up and running so that we can kind of automate things a little bit so that I’m not doing all the day-to-day operations, etc. And I think longer term, I would like to start some type of like fund. And at first, I think I want to tailor it towards pharmacists first and even healthcare professionals. But I think later down the road, it doesn’t have to be someone who’s in that title. My goal with that is to help these individuals get to their own financial freedom, get where they want to be in a safe manner versus the volatility of say the stock market. And I don’t know what that picture looks like yet, but I do have an idea. So everything right now with that is kind of in its infancy stages, so hopefully that can come to fruition within call it five years.
Nate Hedrick: I can tell you’re a guy that gets stuff done, right? I mean, I’ve known you since just 2018, but since that time, I’ve seen you grow tremendously already. And I’m excited to see where you go next, Tanh. So that’s awesome. Alright, well we’re going to come to our final infusion. These are the same three questions we ask all of our guests. So what’s — and I think some of these you kind of answered, but I like to get that kind of definitive answer out the door as people are getting ready to sign off here. So what’s one tangible strategy you can use or that you do use to make sure that you’re investing works hand-in-hand with your career as a pharmacist? Right? We are all pharmacists first. So how do you do things in tandem with that career? You said you still work part-time at Kroger. So what makes that happen?
Tanh Truong: I would say 100% find a property management company that’s reputable in your area, in your market. Interview them, learn as much as you can about them, because they’re managing an asset of yours. You want everything to go well, right? The reason why I say that is because with a property management company, your time is not tied away from your practice. You can practice 40 hours a week or part-time, what have you, still perfecting your craft in that sense while also gaining financial freedom in another way so that the two doesn’t always have to collide.
David Bright: That’s perfect. I love that. Second question is what’s one resource, whether it’s a book, podcast, person, author, website, that’s been most helpful to you in your real estate journey?
Tanh Truong: I think I’m cheating by saying this, but really, it has to be “Rich Dad Poor Dad.” It’s just a book that is so instrumental in changing your mindset. It shifts you from thinking about why or what to how. Like, ‘Why can’t I do this?’ or, ‘Why can’t I afford this?’ to how I can do that. Now, once you’re asking yourself that relevant question, everything starts to change. You start thinking differently. You start trying to figure out things creatively, etc. But I mean, I will also piggyback off that. I would say the one book that was pretty instrumental for me too in the real estate rental side was written by Brandon Turner from Bigger Pockets. It’s called “The Book on Managing Rental Properties.” And I mean, like I said, any book on there, super easy to read. And it’s just a wealth of knowledge. Along the lines of that, I would say, once again, their website is super phenomenal. If you want to learn as much as you can, go on the website for — I don’t know — an hour a day, 30 minutes a day, whatever. Just learn as much as you can. There’s people out there on the site that is willing to help you. And their podcast is super awesome, sometimes it’s a lot of more advanced stuff, so you kind of have to pick and choose which ones you want to listen to. Yeah, those two definitely. I would also say get on Facebook. Facebook has a lot of free knowledge on there. Look for real estate investor groups that are in your area. There’s a ton of people there that’s willing to help you, once again, super great information as well.
Nate Hedrick: Yeah, and even the YFP REI Facebook group we have. It’s going to be a great resource we want to make sure they can tap into as well.
Tanh Truong: There you go.
Nate Hedrick: Yep. Alright, last one and then we’ll wrap things up. What’s one piece of advice you’d give a pharmacist contemplating a start in real estate investing? So the newbie investor, has not taken a turn yet, what would you tell them?
Tanh Truong: I would say find your why. Find why you would want to do this because I’ve always told people, you know, ask yourself why a few times. And the last why that you always ask is always going to be a feeling. And generally for me, it’s happiness, right? So if you have the same type of why, a strong enough why, that’ll be your motivator. It’ll be why you wake up in the morning, etc. I would say that so that you can have your motor running continuously. But along those same lines, I would say you have to get educated. I’m a firm believer of building that solid foundation. Have a strong knowledge base of what you’re doing or what you want to learn about. Like for example, in pharmacy school, they don’t throw you out in clinical rotations or out in practice without teaching you anything on the didactic courses. This is no different. Learn everything you can, and get as much information because knowledge is power, right? And with more knowledge, your risk is always decreased. So from there, go out, break some eggs, and just acquire your why.
Nate Hedrick: I love it, Tanh. I love it. I really appreciate you coming on. This has been just an awesome chat. I think this is not the last time our audience will hear from you. Before we let you go, where can people find you if they’ve got questions or want to get inspired by your continued journey?
Tanh Truong: Yeah, absolutely. So I’m probably the only Tanh Truong on Facebook. First name is Tanh, last name Truong. You can find me on Instagram, it’s probably a little bit harder to find me there. It’s a pretty cool handle that I have, it’s @gin_n_tanhic, which is gin and tonic.
Nate Hedrick: I love it.
David Bright: We’ll put it in the show notes too, so don’t worry.
Tanh Truong: Yeah, yeah. Little pun there. If you also want to put my email in the show notes, people can reach out, feel free. It’s [email protected].
Nate Hedrick: I appreciate it. That’s awesome. We’ll be sure to do that so people can reach out and bug you. Tanh, really appreciate you being with us on the show. This is, again, it’s been awesome, man. Really nice to connect with you.
Tanh Truong: Yeah, thank you. Thank you. I’m very, very humbled, once again, and hopefully I can come back and talk to you guys about what I’m doing later down the road.
Nate Hedrick: We’d love that.
David Bright: Sounds great. Thank you.
Current Student Loan Refinance Offers
[wptb id="15454" not found ]Recent Posts
[pt_view id=”9480b4871g”]
Spread The Word
[TheChamp-Sharing]
