YFP REI 86: How One Pharmacy Director Scaled to 90 Units in 5 Years

Steven Nguyen, a pharmacy director and real estate investor, explains how he scaled from one single-family home to 90 units in five years while continuing to work full-time in his pharmacy career. 

About Today’s Guest

Steven Nguyen graduated from pharmacy school in 2013 and has worked as an inpatient pharmacist in California for the first four years and then as a pharmacy director for the last five years. From 2013 to 2017, he focused on paying off over $250,000 in pharmacy school debt, and once paid off, he shifted his focus to real estate. Steven started house-hacking single-family homes for three years, then quickly realized that it wasn’t scalable. He transitioned to commercial real estate, focusing on apartment complexes and mobile home parks. Steven started a direct mailing campaign and acquired a 26-unit apartment complex and 200-lot mobile home park in 2021 and a 20-unit apartment complex in 2022. Steven Nguyen is based in California but invests predominantly in Oklahoma and Alabama. Steven has a buy-and-hold philosophy and likes to force appreciation via value add strategies and then execute a cash-out refinance to pull out money tax-free, so he can continue to buy more real estate. Over the past five years, Steven has built a real estate investment portfolio of close to 90 units and was able to scale that portfolio while working full-time as a pharmacy director without any partners.

Episode Summary

YFP Real Estate Investing Podcast hosts, Nate Hedrick, PharmD, and David Bright, PharmD, MBA, BCACP, FAPhA, FCCP, sit down with Steven Nguyen, PharmD, to discuss how he scaled his real estate portfolio to 90 units while working full-time as a pharmacy director. In their discussion, Steven shares his story of graduating from pharmacy school with roughly $250,000 in student loan debt, paying off that debt in 4 years, and making the next logical step in his financial journey: real estate investing. By living very humbly, Steven paid off his debt from pharmacy school and saved the down payment for a single-family home in a short period of time. Steven later went on to grow his portfolio with single-family homes in California but found that while the appreciation was impressive, the cash flow was not. This led him to invest in apartment buildings and mobile home parks in Oklahoma and Alabama, growing his portfolio to where it is today at roughly 90 units. Steven shares how he broke into commercial real estate without experience or referrals, how his direct mailing campaign landed him his first commercial deal, and how he leveraged the equity in his properties to buy additional commercial real estate investments. 

Links Mentioned in Today’s Episode

• BiggerPockets
• BiggerPockets Podcasts
• Connect with Steven Nguyen on YouTube
• Follow Steven Nguyen on Instagram: @makingmultifamilymoney
• Follow Steven Nguyen on TikTok: @makingmultifamilymoney
• YFP Real Estate Investing
• Join the YFP Real Estate Investing Facebook Group
• Your Financial Pharmacist Disclaimer and Disclosures

Episode Transcript

[INTRODUCTION]

[00:00:08] NH: Hello and welcome to the Your Financial Pharmacist Real Estate Investing Podcast, a show all about empowering pharmacists to achieve financial freedom through real estate investing. I’m Nate Hedrick. And each week, my co-host, David Bright, and I explore stories from pharmacists all over the country who are achieving their real estate goals, while maintaining a meaningful career in pharmacy. Whether you’re a first-time investor or a seasoned pro, we’re here to provide education and inspiration about the world of real estate. Please note, this podcast is intended for educational purposes only and should not be considered financial or investment advice. 

[EPISODE]

[00:00:42] NH: Hey, David. How’s it going? 

[00:00:43] DB: Hey. Good, thanks. How you doing, man? 

[00:00:45] NH: Good. We just finished an awesome, awesome episode, and my head’s still spinning from it. It was great.

[00:00:52] DB: Yeah, yeah. It’s probably going to be one of our longer episodes because it followed the story of a pharmacist that went from getting debt-free and buying his first house to then going to 90 units and eight figures of debt in just five years, just rapid fire growth. That was really impressive to see.

[00:01:08] NH: Yeah. I just – It was such an incredible story. So we’ve got a great email from Steven Nguyen, pharmacist and pharmacy director from California, graduated back in 2013, had kind of the same story as everybody else, right? Tons of debt to deal with, how do you deal with that? I don’t want to ruin the story, but it’s just incredible to see how he’s transpired from being so far in debt to being even farther in debt. But what that’s actually meant for his financial growth and what he’s been able to accomplish. It’s incredible.

[00:01:37] DB: Yeah. I think when you see kind of the pace of that story, as it plays out over 40 minutes or so, it’s certainly impressive to see also just how organic and natural that growth was, which I think is just super fun about real estate investing. Like there’s certainly the flavor of real estate investing that’s buying that vacation house that you and your family can enjoy, and you rent it out some of the weeks that you’re not there. If that’s the entirety of your real estate investing, that’s your plan, that’s a wonderful thing. 

On the other end of that spectrum is what Steven did, just this really fast growth to 90 units, five years, with no signs of slowing down from here. Real estate investing can have all kinds of different angles to that journey. 

[00:02:18] NH: Yeah. So this is one that you’re going to want to listen to and share with your friends. Listen all the way through, there’s some rapid fire wisdom throughout, and it’s even, again, all the way to the last few minutes. So it’s a really great episode. I don’t want to delay it any longer, and I’ll take you right to it now. Hope you guys enjoy. 

Hey, Steven. Welcome to the show. 

[00:02:38] SN: Hey. Excited to be on the show, guys.

[00:02:40] NH: Yeah. We’re really pumped that you reached out to share some of your real estate journey, your pharmacy story, and I want to get right into it. There’s a lot to cover. So maybe let’s start off with just a little bit about your pharmacy background, and we’ll kind of go from there.

[00:02:53] SN: Yeah. So at a high level, I graduated from pharmacy school in California back in 2013. So approaching that 10-year mark, which is interesting. Time definitely flies. But, honestly, like every pharmacist that graduates, you graduate. I graduated with $250,000 of student debt back in 2013, and you make a six-figure salary starting off. So immediately, I just said, “Wow, I need to learn how to manage my money because I was never taught in school.” I don’t think anyone was taught about finances in school. 

But also, my family didn’t really teach me really either. So I kind of felt like I needed to kind of take it upon myself. But just like everyone else graduating, you’re so focused on paying that student debt. So honestly, for the first four years, I just live very humbly. I still had the college mentality. I was fortunate enough to still live at home, so I can save on the rent, and I just took all the excess money, live as if I was a college student, and just pumped it into my student loans. 

I just did that organically over four years and was able to pay off $250,000 of student debt. I was able to refinance it at a lower interest rate. So I think the federal rate was like 8% during my time, but I was able to lower that to about 4%. So just doing that saved me so much money and time, combined with just living very humbly and frugally, despite making that pharmacist salary. So I basically just – That was my goal was just to pay off my debt. That’s all I knew, to be honest. That’s all my parents taught me is that no debt is good. So pay it off.

[00:04:30] NH: I got to hit pause for a second because that, like a quarter million dollars in four years. Congrats. That’s huge. There are a ton of pharmacists out there that are hoping to do anything even remotely close to that, and you’ve killed it. That’s an awesome setup, so congrats on that. That’s huge.

[00:04:46] SN: Yeah, yeah. Like I said, you just kind of put your head down to take one step at a time. It was work. I didn’t do any overtime or anything like that. I didn’t work two, three jobs. It was just one job. Just organically, you’ll be surprised how it compounds over four years.

[00:05:01] DB: I love that combination of self-control and strategy there that comes in. So you’re not just reducing your spending and the self-control piece there but then also the intentional strategy of the refi. I feel like those themes have to come into play because at that four-year mark, so now four years out of school, you’re thinking, “What’s next? I’ve paid off this debt. I now have this this money that’s coming in. I don’t have all these payments.” What’s then the strategy and the self-control of your next financial moves because it sounds like real estate?

[00:05:35] SN: Yeah. No, you hit the nail on the head. So after I’ve paid off $250,000 of student debt, and I kind of forgot to mention that during that four years, I was kind of job hopping and choosing higher paying jobs. So I kind of naturally did that. Just because like you spent the same amount of hours, you might as well try to maximize how much you’re getting paid. But, yeah, like I said, I was living at home, and what’s the next step after you pay off your student loans is I want to save up for a down payment to live in a house, right? 

It’s just a very natural progression. So once again, just saved that money, I live humbly for a year, and I bought my first property, which was a four-bedroom, three-bath, single-family home in the Bay Area. It was $100,000. So just down 10% of a conventional loan. Fortunately, I didn’t have to pay a PMI, despite downing less than 20% and, basically, was able to get the property. I house hacked. So I know you guys discussed that topic in another video podcast episode. But basically, I lived in the master bedroom, and it was a four-bedroom. So I rented out the three other bedrooms $4,000 each, all utilities included. 

So I literally just posted it on Facebook Marketplace, which is kind of the new Craigslist, and just said, “Hey, fully furnished, all utilities included, Internet, once a month. If you want to rent it, just reach out to me.” Then was quickly able to fill it up and got $3,000 a month in just rent, and that covered my mortgage. So I was only responsible for the property tax, the utilities, insurance, which came up to be around 1,500 a month. So that’s pretty cheap for the Bay Area. I mean, it may sound cheap in other states. But in the Bay Area, 1,500 a month to live is like pennies.

[00:07:21] NH: Yeah. Especially for a nice single-family place, something that you can call your own home too, that’s huge. I mean, I know my brother lives out in San Francisco, and it was like $4,000 a month, the average apartment or something like that. I mean, so you’re really knocking some dollars off that. That’s incredible.

[00:07:36] SN: Yep. So by also doing that too, it’s not the same mentality, right? Like I just kind of saved up. At that point, actually, that’s when I got my first director position. So it took me about maybe about four and a half years before I progressed up from a pharmacist to become a pharmacy director. Then I did have to relocate to San Francisco. Same thing, right? I saved up money because I was getting rent, and I down 10% again for another single-family home. It was $1.1 million in San Francisco, and this property was kind of a makeshift duplex. 

In San Francisco, it’s kind of common, where it’s tri-level. On the first floor or the first, second, and third floor was three-bedroom, two-bath. That’s where I lived. So I live in the master bedroom. I rented out the two bedrooms in that unit. The lower unit was a two-bedroom, one-bath, which I rented out to for college students. They had separate entrances and everything. So I had privacy, right? We had privacy. Once again, like I think my payment was like around $1,500 again to live in San Francisco. As you alluded to, most recently, it’s about 4,500, actually, if you lived in like downtown San Francisco. 

So once again, I just got a job. So I could – After about a year and a half of saving up, I down 10, no PMI, and I just rented out my last house that I was previously living in. So it was a very, very natural progression, and that’s when it kind of clicked for me like, “Hey, can I just do this every year for 10 years?” That was my initial goal. But then, you quite quickly hit a ceiling in single-family homes, where in California, it’s more appreciation. You don’t really get much cash flow. 

I’ll be honest, my first home that I rented out, I was negative about $400 a month, and I was self-managing that myself too. That’s not including like any maintenance, right? So you’re just straight up 400 negative a month. But because I was still working my W2, pretty high income W2, I could take that hit, and that property was appreciating about $100,000 a year since I basically bought it. 

So I mean, I will take the hit, right? Like for that appreciation. But obviously, you can’t own like 10 properties where you’re negative $40. At that point, you’re stuck to your job. So that’s when I kind of paused again and said, “This is not sustainable. This is not scalable. What’s next?” For me, I started watching a lot of podcast, a lot of YouTube videos. That’s what’s great about the modern day. I stumbled across BiggerPockets, and they do a lot of real estate stuff. It just kind of got me open to the concept of remote investing out of state. So that’s when I really pivoted.

[00:10:29] DB: So before we jump to that pivot to out-of-state investing because I think that that’s a big shift. I think that there’s a preparatory step in there that I think a lot of folks are sitting on right now of they’re looking at that move to a bigger house, to a different area, some sort of move, and they’re trying to figure out what do I do with the existing house that I’m in. You made the conscious decision to keep the prior house as a rental, and you made the conscious decision to do it, even though it was losing money. 

I think a lot of people have this belief that the only way that I’m going to be a successful investor is if it creates cash flow. So what was it that made you think that, “You know what? I’m going to keep it, despite the negative cash flow, and I’m a believer in this is a good investment still.”?

[00:11:14] SN: Yeah. So this is the greatest debate in single-family homes is cash flow versus appreciation. So obviously, California is purely appreciation versus where I own apartments in Oklahoma, it’s mostly cash flow, right? But then while $800 a month in cash flow sounds very appealing and appetizing. But if you have one roof goes out, you basically just got wiped out that whole cash flow for a year now easily, right? Versus an appreciation, that’s the one where it silently grows without you even noticing it, and that’s where it’s life-changing, right? Because as I mentioned, you kind of fast forward till today, that property that I bought for 100,000 is worth $1.3 million now. That’s half a million dollars in appreciation. 

I literally did nothing, right? I literally just rented it out. It’s the same tenant that’s been living there the entire time because we have high-income tenants. You have to think long-term in real estate. Like if you hold real estate with a 10 to 30-year mindset. For me, I never want to sell real estate ideally because you’ll never lose, right? Like my parents, they bought homes in California. The house I grew up in, they bought it for $600,000 in 2004. Today, it’s worth $2.1 million. 

So I mean, if you have that long-term outlook, you can’t lose, right? You can’t lose. My interest rate on the property is 3.7%. That’s less than inflation. So if my income goes up organically, rents goes up organically, and your property goes up organically, like you can’t lose. So for me, I saw it as an investment long-term. You just want that equity because I made enough money through my W2 job that – I don’t hate my W2 job, right? I don’t mind working it, and a $40 hit isn’t that bad when a lot of people are paying rent. 

Like a lot of pharmacists, I hate to say it, they live a very fancy lifestyle, nice apartment, new car, brand new Tesla, everything, right? The whole works. A lot more lavish than me, I’ll be honest. I’m a pharmacy director, and I own 90 units, and I’m still able to stay humble. So that’s what kind of my mindset was, was just to kind of live humbly, live beneath your means, and think long-term. I’m now seeing the fruits of that compound effects five years later. 

[00:13:35] NH: I just did the math for you for those playing at home. $500,000 over five years, so 60 months, that’s $8,333 in cash flow every single month. So if you want to break it down that way, right, like if you’re trying to compete with the cash flow play. So that shows you the power when you’ve got a market like California, where the appreciation is just so far removed from, one, everywhere else but, two, from that cash flow perspective. You can’t compare the two anymore. So that gives you some idea.

[00:14:06] SN: Yeah. So like you said, I think anyone will take a negative of $400 a month to make $180,000, which is essentially pharmacist salary in California, and it’s tax-free. Like I said, I think anyone will take that gamble, right? You can ask anyone. They will take that gamble in a heartbeat.

[00:14:22] NH: Yeah. That’s incredible.

[00:14:22] DB: Yeah. So you’re then hitting on the different values that real estate investing can bring. So the appreciation is the one piece. There’s the mortgage pay down, the fact that as a bonus to all of this, those tenants through their rent, you’re paying down your mortgage. There’s the tax benefits, and then there’s also the cash flow, which is what pivoted you to Oklahoma. So it’s kind of wild to think that you saw this half-million-dollar increase, and then you did more of that and more of that. That sounds really good. Why would you look away from that half-million-dollar increase and look to another market? What made Oklahoma or some of this distance investing feel like a win?

[00:15:01] SN: Yeah. So once I kind of learned about how commercial loans work versus conventional single-family homes loans work. So the example that they give is if you have two single-family homes right next to each other, and one rents for 5,000 a month, and the other one rents for $10,000 a month, when you go to sell it, they sell for the same exact price because it’s based on the sales comps. 

But over an apartment complex, if he had the same example, let’s say you have a 20-unit apartment complex that rents 5,000 a month, and the other 20-unit apartment complex rents for $10,000 a month, the one that rents for $10,000 a month is worth double. The reason for that is the value is based on the net operating income divided by the market cap rate. So the net operating income is the income minus the expense. So you can control the income by raising the rents. You could control the expense by maybe doing some water conservation, for example. The market cap rate is determined by the market, right?

Oklahoma, it’s about seven, eight cap. California is probably like a two, three cap. So once I learned that concept, it completely blew my mind, and it just made me realize I don’t want to buy single-family homes again because as you increase your cash flow, you actually increase the value. So you have – It’s like having your cake and eating it too, right? Like before with single-family homes, it’s either appreciation or cash flow. Of apartments, if I have more cash flow, it forces appreciation, and you have both. 

Once I learned that concept, it just completely blew my mind. I just said I need to get started in this in a low-risk way. Because we’re pharmacists, right? We’re very risk-averse. Let’s be honest here. That’s why we’re all in the profession. I just said, well, in Oklahoma, I can get a 26-unit apartment complex for half a million dollars. That’s cheaper than all my single-family homes in California by half. I need to use this opportunity to learn about apartment complexes because once again, very conservative, you want to test the concept before fully committing to it, right? It’s just kind of like doing a residency in pharmacy school to see if you want to do inpatient pharmacy, right? You do the residency. You either like it or you hate it, right? 

That’s the same of apartments. So I thought it was a very low-risk way to get apartment complexes. So what I kind of learned was when you first dive in apartment complexes, number one, it’s intimidating, right? Like a lot of people tell me, “Steven, I own single-family homes just like you, and I’m too intimidated to jump into apartment complexes. Only rich people own apartment complexes.” To be honest, that’s what I believe too, until I got my own. But pretty much, when I go into the game, a lot of brokers will not take you seriously at all. If you have no track record, you don’t own any apartment complexes, even if you own 10 single-family homes, they don’t care. You own no apartment complexes, so they will not take you seriously. 

Instead of complaining and crying and giving up, I just said, “Let me find off market deals.” So I started sending out letters. I sent out letters to property owners using PropStream to kind of dive into the weeds there a little bit. I just would write letters. I’d use my doctor title. I’d flex on that a little bit. We’re all doctors here. So I’d say I’m Dr. Steven Nguyen to build that trust and credibility. I just sent out about 1,800 letters over six months, and one owner called me back, and he wanted to sell his apartment complex for half a million bucks, 26 units. I just kind of underwrote the deal and made it work. Made an offer, did all the due diligence, and I’ve owned it for about a year and a half now. 

What’s kind of crazy is I bought it for half a million dollars. I got $60,000 in reseller repair credit after due diligence and inspections. So my down payment was effectively 10%. Then also, the property appraised for $750,000 day one. So I made $250,000 in equity day one by going off market. 

[00:19:00] NH: That’s crazy. 

[00:19:00] SN: So that just completely blew my mind, right? So that’s why I pivoted is because I learned that you can make just as much in apartment complexes as single-family. So that’s why I was able to leave my comfort zone of single-family homes in California to take that calculated risk very methodically to do that. Because worst-case, if I mess up, I can sell this and still make $250,000. That’s still decent, right? But my prediction after I’m done of renovations, so the rents of the property were around 350, I think I can double the rents after about $8,000 of renovation per unit. 

I rent it out for $700 just recently. I finished renovating about maybe seven units, and I’m hitting $700 in rents. So I just doubled my rent. What does that mean? I doubled the value of my apartment complex. So it appraised at 750 to be worth from 1.5 million. So it’s about a million dollars of equity, right? I can’t do that in California. I mean, it’s – Like I said, once I learned that concept, then that mindset shift, it just completely shifted my mind. I just said I love my California portfolio. But once I learned this concept, I could just not go back. I have to do this. It’s too great to not do.

[00:20:16] NH: I really appreciate you going into this number, Steven, because I think that really gives perspective on what people are talking about and what you’ve been able to accomplish. Because, again, you talk upfront about this $800,000 place. It was $80,000 down at 10%. Everyone assumes that’s low risk, right? People are doing that every single day of the week doing that, right? You bought an apartment complex with 26 units for $50,000 down, right? Like less than that. But everybody, every single person you talk to, is telling you how much riskier it was to do that. But it cost you $30,000 less, just looking at the down payment, right? 

I think that’s super, super important to see those numbers. Actually flush that out and have conversations with people that are doing this before you make a judgment call about, well, this is riskier than that because I don’t know anything about it, right? It doesn’t mean it’s riskier. It just means you aren’t knowledgeable yet. So that’s – Again, I really, really appreciate that perspective. It’s really cool.

[00:21:08] SN: Yeah. No, I’m glad you said that. It’s because – Like for me, I’m a type that I don’t know until I’ve done it myself. So I’m always the type to, like I said, dip your toes before diving in. I’m sure most pharmacists can relate to that mindset. Like I said, like to me, I actually think it’s riskier to own single-family homes because if your single-family home is vacant, you’re 100% vacant. In my 26-unit, I can have five tenants not pay me, but I have 21 other tenants paying me. 

So to me, I think it’s riskier to not have a single-family. Or if you’re doing fix and flip of single-family homes, right? If you’re fixing and flipping it, you’re getting zero income because you’re renovating it, right? But my apartment complex, I’m still getting paid by 20 other tenants as I’m renovating five other units. So basically, once I finish for any of those five, I rent it out. Then at that point, tenants kind of know that you’re probably going to raise the rent, so they might leave organically. Or you can just move out tenants that are not your desirable tenant base, and then renovate their unit, and then rent that out. 

That’s what I really liked about it. It’s actually lower risk, and banks actually love apartment complexes more because it’s income-producing. It’s an income-producing asset. With single-family homes, they look at your debt-to-income ratio, right? That’s based on your income. We’re pharmacists, so we make good money. But eventually, if you own like 10 single-family homes in California, my debt-to-income ratio is going to be so terrible because my rents are negative, right? Essentially, I’m negative. 

But with commercial lending, they look at the property. So the fact that my property cash flow is so well, the metric is called debt service coverage ratio. It has to be greater than 1.25. If you hit that, they don’t care. They have no experience at that point. They didn’t care that I had zero apartment complex experience. They just saw the deal and how amazing it was. Like I said, they appraised $250,000 day one, above what I purchased. 

[00:22:58] NH: I was going to ask that. Is that how you got over that hump of I don’t have the experience, so I can’t get in the game. But because you brought them such a fantastic deal, once they assessed it as well, they said, “Oh, yeah, yeah. Well, we can handle this,” all of a sudden. Is that where that shift occurred?

[00:23:12] SN: Yeah. Like I just said, like once you have the good deal, the money will come. They don’t care about your experience, right? So that was my hurdle that I had to jump over. So that was a little hack that I did.

[00:23:22] NH: But like I have to know, like as you’re sending these letters out, Steven – I’m just picturing this moment. You’re sending these letters. You have nobody telling you they’re going to give you financing. But you’re sending notes to apartment complexes like, “Hey, I’ll buy your place.”

[00:23:33] SN: Yeah. My letter – So I’m very strategic in how I do my letters. It’s almost like an invitation card, like a thank you card. So it kind of creates that intriguing mystique. But in the letter, I just come off like a regular Joe, right?

[00:23:46] NH: I love it. 

[00:23:46] SN: Like, “Hey, I’m Steven. I’m a pharmacist. I own five rental properties. I’m just trying to build a portfolio and take care of my family.” If you have kids, obviously, you want to list your kids. Like I have a two-year-old, a three-year-old, and I just said, “I’m pre-qualified with a lender, and I’m interested in buying your property.” Then, “Just give me a call or text me.” That’s how it all starts. 

So usually, you just send your letters and then about – I send out 30 letters a month. So about maybe 10 will call me, right? We’re detail-oriented here, so about 10. 3% will call me, so about 10. Then out of the 10, maybe 1 might be serious about wanting to sell. So it’s just building that trust, building rapport. We’re pharmacists, right? We’re pharmacists. Consultations, we’re the most number one trustworthy profession in health care. So it’s a very natural ability that we have to build that trust. We’re doctors too, so like it takes down their guard. Like I’m not just some random guy from California. I’m a pharmacist. 

[00:23:46] NH: Yeah. I love it. 

[00:24:42] SN: I use that title, and I leverage that to my advantage. It’s not a crutch. It’s actually an advantage sometimes, if you shift your mindset a little bit. So that’s what helped me be successful. That’s how I scaled to basically my 90-unit portfolio was off market with emailing. 

[00:24:58] NH: That’s awesome. Wow. 

[00:25:00] DB: Yeah. I want to talk about growth then as well because one of the things that I think is different about commercial is as you increase that value, that allows you to complete a cash out refinance where the bank sees, okay, now this is worth more, and they let you borrow that money back out of it. So I’m wondering, is that the strategy that you then bought the next commercial building? Or how did you expand from there?

[00:25:24] SN: Yeah. Fortunately, for me, I actually just cashed out refi, some of my single-family homes, which had built up a lot of equity in it. I was able to actually pull out a HELOC back when they allowed it on investment property. So I locked it in before they removed that product. So that’s what really helped me leverage a little bit. My apartment complexes are not quite there yet because I’m still renovating it. But my goal is to do cash out refi. Just doing some numbers there. 

So like at a high level, I bought it for half a million. I’m putting about $200,000 to renovate it. So I’m all in for about $7,000. I think it’d be worth about $1.5 million, and you do a cash out refi. You basically put your down payment. You pull out all your renovation costs and maybe a little bit extra, right? That’s considered very successful. You pull all that money tax-free that you can go buy another apartment complex. 

For me, I was able to leverage my single-family homes with cash out refis and HELOCs. Actually, there are some lenders that they’ll do a personal line of credit. So the bank that I paid off my – That I refinanced my pharmacy school debt with, First Republic Bank, they actually have a personal line of credit for $100,000 unsecured, and it’s pretty low interest rates as well. I think mine was like 3%. So you can borrow that to leverage to buy more real estate, right? 

You’d have to be comfortable with a little bit debt and leveraging, but that’s the growth phase, right? Like I’m still growing, so you want to leverage. But then once you’ve hit your financial independence number, whatever that is, at that point, you can kind of slow down, and you don’t have to maybe pull out as much cash as you needed to. So that’s what really helped me scale was just leveraging my assets. Quickly, once you close in your first apartment complex, what does that mean? You now have experience, right? You have a track record, and now lenders know you. Now, you know the market, and you have a property manager. You have your system built in place, right?

This is starting to sound like a little pharmacy now, right? I built my pharmacy from the ground up. I have a system in place. It’s self-sufficient. Now, it’s easier for me to buy more apartment complexes because I know the area. I know Oklahoma. I know a one-bedroom rents for 650, a two-bedroom rents for 750. The average price per unit in an apartment complex is $50,000 per unit, renovated. I know that out the gate, right? I only did that because I own property there, and I’ve been analyzing deals that it’s like repetitions, right? It’s like going to pharm school. It took us four years to do this. 

I’ve been working as a pharmacist for nine years now. So at this point, it’s like autopilot. But then, with real estate, you have to go through that learning curve of real estate and single-family and with multifamily. So that’s what I did, and that’s how I was basically able to kind of organically scale up, right? That’s how I went from one apartment complex to a second apartment complex. Then I slightly deviated a bit, and I got a mobile home park [inaudible 00:28:08] into the mix there. 

But like I said, once you kind of understand the basic concepts of commercial real estate, if you increase the NOI, you force the appreciation, it gives me more control, right? I’m a pharmacist. I’m a control freak, right? Right now, appreciation is not under my control. It’s just whatever the market dictates. But increasing rents and decreasing expenses, that’s fully under my control, and that’s what makes it very powerful for me. It kind of ties in naturally with me as a pharmacist, right? We like control because we have to be to be accurate. So I feel like I just had more control with apartment complexes than with single-family homes.

[00:28:44] NH: I love that. Something you said that I think is really key, and I want to go back for just a second, is that you have to be comfortable with a little bit of debt. One of the first things we talked about was getting out of debt, right? You got to school tuned for $2,000 in loans. Got to get away from that. Got to get away from that. You have way more than $250,000 in debt, right? Like does that ever – Do you ever wake up and be like, “What am I doing? Am I allowed to do all this?” I don’t know. I just think it’s an interesting concept, right? 

We all panic about debt, but what you’re establishing is good debt. I think that’s – Even though we look at that as good debt, the three of us sitting on this call know that. But a lot of people look at that as scary because it’s the D word, right? It is debt. Does that ever bother you? Or you just know it comes to the territory? 

[00:29:30] SN: Yeah. No, it’s a great point. Like a lot of us grew up where debt has a negative tone. 

[00:29:35] NH: Absolutely. 

[00:29:35] SN: Like a lot – Credit card debt, car loans, student loans. That hits home for all of us. But you know what’s crazy was like student loans was 8% interest, and there’s no – I think the tax write off was like 2,500 at the time. But with real estate, it was like 4%. I was like, “How is it cheaper to get a home mortgage? It’s like half my rate. Do you not want working professionals to take care of patients?” That was my joke at the time. 

But with debt, like you said, it is leverage, like to buy a million-dollar piece of real estate. I can put 10% down, which is $100,000. But if you put that into like stocks, if you have $100,000, you only get $100,000 worth of stocks, so you can’t leverage up. But then also, kind of back to your point of debt, when you get into apartment complexes, there’s something called non-recourse debt. So non-recourse debt means that you’re not personally liable for it. So what does that mean in simple terms? If I go bankrupt, the bank would just take back the property. They can’t come after me personally and my other assets. 

[00:30:37] NH: Great. 

[00:30:38] SN: With a single-family home, which is typically recourse debt, if I go bankrupt on that property, they’re going to come after my other assets. So to me, even though I do have a lot of debt, I want to convert a lot of my debt over to non-recourse debt. Usually, you can do that by paying a higher interest rate. So let’s say the typical interest rate is 6% for recourse debt. You might maybe pay like seven and a half to eight for non-recourse debt. But is that 2% bump worth that peace of mind of not personally being guaranteed for it? I’d say so, right? 

So it just really – That’s why I said it’s really the mindset shift. Yeah, sometimes I do wake up. I’m about $12 million dollars in debt. I’ll be honest. But like I said, in the accumulation phase, when you’re trying to – I’m trying to hit financial independence, so I have the option to leave my day job. That’s my end goal. Unless I can get a remote job, that might extend my life a little bit longer. But being in the basement of a hospital for 10 years, it wears you down after a while. I could use a little sunlight periodically. 

But once I hit that number where I can leave my job, at that point, you can reevaluate like, “Do I want to leverage? Or maybe I can just start doing larger down payments. Maybe I cannot cash out, refi my properties, and collect that cash flow.” So really, it’s all in your control, right? So I’m in the accumulation phase. But later, you might just want to cruise. Like if I have a family and kids, I don’t want to leverage as much. I don’t want that stress. It’s just options, right? That’s what’s beautiful about real estate is it just gives you options. So that’s why I do it. That’s why everyone does real estate. It’s just to have options and flexibility down the road. 

It’s just a matter of how you want to play the game, and how you play the game always varies, depending on which stage of your life, just like in pharmacy. In the first five years, I’ll be honest, you’re very gung ho. You want to learn, do everything. Then once you’ve been in it 10 years or 20 years, you just kind of want to do the bare minimum and get that raise like everyone else.

[00:32:26] DB: Well, I love the why and the vision that you’ve set for what real estate can do and the cash flow and the financial independence. A lot of those things that I think people are after in their financial journey. One of the things that you talked about too a few minutes ago was the learning curve to get there because I think that in 30 minutes, you’ve distilled five-plus years of hard learning, right? So I think that there’s some people that heard a lot of terms like non-recourse debt and DSCR loans and commercial and cap rates. There’s a lot in there that can be intimidating for a listener that’s just getting started. 

So I’m curious, those first couple steps and what that encouragement might be for someone that’s trying to learn and trying to just drink from the fire hydrant right now.

[00:33:10] SN: Yeah. For me, I would really suggest – Like for me, I’m the type where I just can jump in headfirst. I’m the type to jump out of the airplane and build my parachute on the way down, right? I know a lot of pharmacists are not that way, right? They want to make sure. Like they triple check the parachute before they even jump, right. But for me, I think it’s what I’d recommend is just get educated, number one, right? There’s a lot of resources out there. There’s a lot of real estate podcasts, a lot of YouTube channels that you can learn from. 

But honestly, in all those podcasts and YouTubes, they teach more about the mindset about it, but they don’t actually give you the details, right? That’s what we want as pharmacists. We want the devils in the details. That’s what we want, right? That’s what we crave. So because I thought I was lacking in the community, I actually just tried to like form little mastermind groups of like-minded individuals, right. 

So like just remember in pharmacy school, we did a little like patient workups, and they put us on like teams like threes and fours. I applied that same concept to real estate, where I was surrounding myself with people who are buying apartment complexes. So it made it seem like those normal apartment complex. I felt abnormal not owning one. That’s how it felt, right? So it’s really who you surround yourself with. Then you start to learn from their skills and experience, right?

The way I phrase it is like everyone is maybe one step behind me. Like even though I own 90 units, it’s impressive, but like realistically, I’m maybe one step ahead of you because I literally just jumped from single-family homes to apartments. So you just got to follow in the footsteps of someone else, and that’s what we learned in school, right? When you’re a P1, you follow the P2. The P2s follow the P3, P4, and so on. So it’s the same model. Just follow somebody that’s doing what you want to do and follow their path, right?

You’re not reinventing the wheel like pharmacy. Nothing’s brand new, for the most part. It’s pretty much the same. Same with real estate, it hasn’t really changed. So just find somebody that you like, that you want to work with and learn from them, right? But obviously, as a new investor, like let’s say you want to work with me, you have to give me value in some way. So find ways to give value to people that are doing what you want to do. Then that’s how you get into circles, and that’s how you network and build a community. Yeah, that’s what I would recommend to someone starting off.

[00:35:15] NH: That’s great advice. That’s awesome. In fact, it leads me to our three final infusion questions that I think you’re just brimming with advice. So I’m really excited to ask you these. This is good stuff, Steven. The first question in our final infusion is what’s one tangible strategy that you use to make sure that you’re investing works hand in hand with your career as a pharmacist? Especially somebody like yourself, crazy, busy pharmacy director, how do you do it?

[00:35:40] SN: Yeah. Like I said, I think the skill sets translate very well. As a pharmacy director, my biggest hospital I managed about 40 pharmacists. So you have to kind of leverage and delegate, right? So if you’re delegating your time out of it. Obviously, I work at least 40 hours a week, and I’m not physically in Oklahoma. So you really have to spend a lot of time vetting your team. Once you built that team, and the number one player in your team is typically your property manager, once you have that property manager that’s strong, they’ll find every other player in your team, like the general contractor, insurance agent, title insurance company, all the rest of your team. 

If you have a strong property manager and interview them and screen them, then everyone else will organically come to you, right? So it’s just like when I interview pharmacists for a job. I’m interviewing like 20 of them, and I’ll pick the best one. Same thing with property manager, I interviewed 20 of them. I rank them one, two, and three, just like residency ranking, right? Similar concept and I make the offer to the first one first. If they don’t work out, I had my two backups. 

Basically, it’s building systems, right? Like pharmacists, we’re very system and detail-oriented. That translates very well to real estate, and you’ll be surprised. Like I’m the one lighting the fire, and my property managers say, “Hey, like you can improve your system by doing this and to be more efficient.” That’s how we’re trained in the hospital, right? You have to be very efficient, very timely, in terms of drug distribution. So we’re constantly tweaking the system to improve it for medication safety. 

Same thing with real estate, this property manager, how can you be more efficient? You can automate these reports. You can have them automated and sent to me via email every month. I can outsource my direct mailing campaign. There’s ways to leverage. So I think the key is learning to leverage, learning to delegate, and building systems in a team, if you can do those three. I know it’s hard for some pharmacists, especially the ones that want control. But once you kind of learn that, that’s how you scale. 

[00:37:33] NH: It’s great advice. Love it. 

[00:37:35] DB: Absolutely. Yeah. Those key people in the team vetting that, spending time on that, super worthwhile. What’s one resource that is most helpful to you in your real estate journey, whether it’s a book, podcast, person, author, website, whatever that would be?

[00:37:50] SN: BiggerPockets was kind of my first podcast I listened to in terms of real estate. They definitely kind of taught me the mindset. But I think in terms of just learning, YouTube has a lot of valuable information on there that you just can search, like how to underwrite apartment complexes. There’s a lot of people who will underwrite deals live. Actually, I underwrite deals live. Like I underwrote at least 100 deals-plus for every deal that I got. So I just said, well, instead of wasting my time doing it alone in the basement, I actually recorded some of the deals where I underwrote it. Back of the napkin math in like five minutes. It’s not something fast. You can do it during your break, if you want. During your 15-minute break or during your lunch. I can quickly underwrite deals fast. 

Once you build those repetitions, just like in pharmacy, like that’s how you get really fast at it, to the point where I can look at a deal in Oklahoma City, and I know within like a minute if this is even worth underwriting at all. So I just think, for me, I learned by doing, and I kind of relate it back to like APPE rotations. When you’re in fourth year of pharmacy school, what are you doing? You’re applying what you learned. So you can learn everything you can the first three years. But honestly, we’re just trying to pass those exams. That’s all. Just circle A, B, and C. Hopefully, you circle the right one, right? 

But in real life, there’s no A, B, and C. It’s, oh, how can I creatively problem solve this, right? If you can go through pharmacy school and explain diabetes to a patient, I think you can do real estate and learn that, right? It’s not rocket scientists. A lot of people that invest in real estate, they don’t have much of an education that we do. We’re doctors. So definitely, if they can do it, we can do it too. That’s just kind of the mindset I always kind of had, right? Like if they can do it, so can I. Like why can’t I do that?

[00:39:36] NH: Well, that’s a perfect lead then to our third question. If you are talking to a new pharmacist, what is one piece of advice you’re giving to that pharmacist, if they’re contemplating a start in real estate investing?

[00:39:46] SN: Yeah. So the number one issue that all pharmacists suffer is analysis paralysis. I mean, we’re definitely guilty of that, especially with how risk-averse we are, how detail-oriented we are. We feel like we know everything before taking that dive. So I would say just get a baseline knowledge. So know how to underwrite deals, right? Know how to pick a market. Know why. I kind of phrase it, pick your unfair advantage, right? So where’s your unfair advantage?

For me, why did I choose Oklahoma? Because I had a really good property manager there, plain and simple. I didn’t really know much about it. I had a really good property manager there, and they’re my boots on the ground. So because of that, I committed to Oklahoma. So my kind of advice would be just get educated and find your team. Find that key player, which is typically going to be your property manager, and build that trust, right? It’s just like asking questions, right? That’s what we’re great at as pharmacists. We ask questions to get information. Then from that, we process the information as additional questions. 

If you talk to 20, 30 property managers, you’re going to learn a lot, and that’s what I did. I talked to a bunch of them. That’s how I learned about the market and where’s a good pocket, where’s a bad pocket. I talked to a lot of general contractors who know how to renovate apartment complexes, right? I’m not a general contractor. I’m not even handy. I can’t even replace my own toilet, right? I can only count on fives, right? I’m a pharmacist. Just talking to them, understanding. Like I asked him, “How can I be cost effective, while getting the most rent?” That’s renter-proof, and what’s renter-proof, right? 

So then they’ll tell you, “Okay, this is how you’d be cheap. Make it look nice, but have tents that like it, and they’ll pay you top rent for that.” So you ask them, and they’ll tell you, right? Like they’re the expert, just like how we’re the drug expert. Doctors come to us for drug advice. I go to the contractor for contracting advice. So it’s just really being able to be a student, right? In pharmacy school, we’re always trained to always be – You never stop learning, right? I graduated 10 years ago. I’m still learning to this day. It never stops, right. 

If you apply that to other facets like real estate, you’ll do well. But the key is you have to take action, right? Like knowledge without action is useless. There’s a lot of people in my mastermind group that I started, we all started the same place. Fast forward five years, they took no action. They still own no real estate. They don’t even owned a home that they live in, and I scaled to 90 units, just by taking action. But we all start at the same spot. 

Then as you take action, just know that everything that you predicted will probably go wrong. I messed up many times too, where I took over an apartment complex. Pest inspection was clean. When I took over, guess what happened? I had a bedbug infestation, and that cost me $10,000 to fumigate all 20 units. It’s terrible. But I bought that apartment complex, correct, and I made $200,000 equity day one. So now, I made 190,000 equity day one because I spent 10,000. 

You have to have flexibility to know what’s going to happen. So have reserves, right? We’re conservative here. So I always have make sure I have a lot of liquidity, whether it’s line of credits, personal cash. You want to be very conservative. Assume things are going to take longer and even cost more because most likely that’s going to happen. So just having that very conservative approach, which most pharmacists do. I think we’re actually primed because we’re very systematic, we’re very calculated, and we’re very risk-adverse. 

Actually, if you use that, that’s not a crutch. That’s actually an advantage, but you have to be willing to take action to even utilize our skill set that we have, organically.

[00:43:11] NH: For sure. 

[00:43:11] DB: I love it. I love how you’re the advocate for the pharmacist investor in this, and you’re bringing wisdom in behind that to back that. So for people that want to learn more from you, connect with you, where can people find you?

[00:43:25] SN: Yeah. So you can find me on YouTube at Steven D. Nguyen. Or if you look on Instagram or TikTok, it’s @makingmultifamilymoney. So I actually host a weekly teaching session and followed by a Q&A every Wednesday at 7:00 PM Pacific time. My goal is just to kind of share my experiences, like kind of what I did today, and kind of teach people, and give people an opportunity to do Q&A. It kind of feels like I’m a lecture all over again. Like I said, it’s very organic. I do like teaching real estate investors. I like teaching pharmacy students, pharmacy residents. So it’s a very natural progression to teach people in real estate. It’s actually very rewarding for me. 

I kind of joked, we’re talking kind of offline before this, that like I never shut up about real estate, and my family is so sick of hearing me talk about it. So I need an outlet to get it out there. That’s why I started these Q&A sessions. I just kind of wanted to give the information out there and inspire people and just make it known that is possible, right? It is possible that you can work a full-time W2 as a pharmacy director, which everyone will say it’s very busy and still scale to 90 units at the same time. I just kind of want to share my story to make it known that it’s possible and, hopefully, inspires others to take action to say, “Hey, this guy can do all this. Maybe I can buy my first single-family home.”

[00:44:41] NH: We’re really glad you did, Steven. We appreciate you coming on the show today because it’s been an awesome, awesome ride, hearing about your journey, and I’m expecting to hear a lot more exciting things from you in the future. I’m sure we’ll be inviting you back on to share even more down the road.

[00:44:54] SN: Yeah, yeah. Hopefully, when I’m back on, I’ll have more units, and maybe my blood pressure will go down a little bit.

[00:45:05] NH: Oh, yeah. We appreciate you joining us. It’s been awesome.

[00:45:07] SN: Thank you so much.

[00:45:09] DB: Thanks so much. 

[OUTRO]

[00:45:10] TU: Thanks for listening to the YFP Real Estate Investing Podcast. If you like what you heard on today’s show, please leave us a review and subscribe to the show, so you never miss an episode. If you have a question, know someone that would make a good guest, or want to connect with Nate or David, head on over to yfprealestate.com and join the growing YFP Real Estate Investing Facebook group. 

As we conclude this week’s episode of the YFP Real Estate Investing Podcast, an important reminder that the content in this podcast is provided to you for your informational purposes only and is not intended to provide and should not be relied on for investment or any other advice. Information in the podcast and corresponding materials should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment. 

Furthermore, the information contained in our archived newsletters, blog posts, and podcasts is not updated and may not be accurate at the time you listen to it on this podcast. Opinions and analyses expressed herein are solely those of Your Financial Pharmacist, unless otherwise noted, and constitute judgments as of the dates published. Such information may contain forward-looking statements which are not intended to be guarantees of future events. Actual results could differ materially from those anticipated in the forward-looking statements. For more information, please visit yourfinancialpharmacist.com/disclaimer. 

Thank you for your support of the YFP Real Estate Investing Podcast. Have a great rest of your week. 

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