Summary: The goal of our Investor Spotlight series is to provide you with stories of real doctors and high-income professionals who are at different points in their journey to financial freedom through real estate investing. Today’s spotlight is on Carlos and Isabel. They started their real estate journey in 2020 in the midst of the COVID pandemic. Their first property was a long term rental. From there, they pivoted to short-term rentals. Within a few months, they had acquired three short-term rentals and they are well on their way to achieving financial freedom!
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[We interviewed Carlos and Isabel during our first annual Fast FIRE to Freedom Summit in August 2021. Be sure to read to the end for a 2022 update!]
[You can watch the interview here to hear Carlos and Isabel’s real estate journey in their own words!]
Carlos is a vascular surgeon and Isabel is a pediatric physical therapist. They started off their investing journey by investing in a long-term rental in their home state of Washington. They have since done a 1031 Exchange on that property and used those funds to pivot to short-term rentals and now have properties in three different markets!
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How did you become interested in achieving financial freedom through real estate investing in the first place?
Carlos: In 2020, during COVID, I watched Letizia give a talk about real estate investing and I got really interested. From there, Isabel and I dove into learning about real estate investing. We started with Semi-Retired MD’s Crash Course. We then read Rich Dad, Poor Dad together. Finally, we signed up for the Zero to Freedom Course. The rest, as they say, is history.
What is your “why” behind this? Was there a triggering event that led you to start your journey of achieving financial freedom through real estate investing? Once you decided to pursue financial freedom through real estate investing, how did you get started?
Carlos: What interested me initially was the whole concept of building up your assets and reducing your liabilities.
I really liked the idea of having something that’s going to provide you with an income. During the pandemic, a lot of doctors experienced sudden cuts in salaries and/or their hours being restricted. So having another source of income made a lot of sense.
I learned a lot about other types of investing, such as investing in the stock market. But, real estate made a lot more sense to me, not just because of the cashflow, but also because of the other ways you can make money including debt paydown, the potential for appreciation and the tax savings.
One of the other things I really like about real estate is that I feel like it’s this great equalizer. Real estate doesn’t care where you went to school. It doesn’t care about your grades. Real estate is there for the taking.
What type of properties make up your real estate investing portfolio? Were they in state/out of state?
Carlos: Our first purchase was a triplex in Washington. From there, we bought a short-term rental in Washington and another one in Gulf Shores, Alabama. We are also currently under contract for two additional short-term rentals in Tennessee.
How are you balancing gaining financial freedom through your real estate investing with your career(s) and your clinical work?
Carlos: Isabel sent me a little screenshot of the part of the Airbnb site that tells you how much money you’re making this month. Our profit for one month (during the summer) from our two short-term rentals is very close to my gross income as a surgeon. It’s impressive that these two properties can suddenly generate this much income.
This all plays into how much longer and how much harder we need to work as healthcare professionals. With this sudden increase in our income, Isabel is able to transition from a part-time role at her job to a per diem role. I also now have the freedom to say, I don’t really have to keep doing this for 40 more years. I have the ability to choose how I spend my time.
Can you tell us about any difficulties or failures you’ve had in real estate investing? Any big learning points you’ve taken from these experiences that you can share with us?
Carlos: Isabel found a property in Florida that we really liked. We submitted an offer and it got accepted. We locked it up very quickly. Then, she went out to Florida to check out the property during inspection. It was not the right place for us. We didn’t feel that it was safe. So, we pulled out and kept looking.
Once we had our criteria of exactly what we were looking for, we found another property in Gulf Shores, Alabama, that we really liked. It was a duplex that we could use as a short-term rental. We submitted an offer that did not get accepted.
It wasn’t until our third property that we finally found what we were looking for. This one was also in Gulf Shores and we locked it up pretty quickly.
This property provided an interesting lesson in adaptability.
The first lesson was adapting to a delay in closing on the property. The property was set to close in the middle of the peak season, so we were hoping to get it rented as soon as possible. Isabel had plans to fly out there to get the property set up as soon as it closed. We had everything arranged with our au pair’s schedule and my work schedule for her to be gone. Then, something happened that pushed back our closing by a week!
The second was adapting to a delay in her flight, which shortened the time she had to set up the property. She was supposed to have a full week to get the property set up but because of flight delays, she didn’t get to Alabama until Tuesday and only had four and a half days to get the property ready. Our first renters were set to come in on the following Tuesday.
In those four and a half days, Isabel was able to get everything set up. Even though the property was sold to us as a turnkey, it really wasn’t. We had to get rid of all the furniture. So she had to arrange to have everything taken away and get new furniture in. Somehow she made it all work.
One other way she adapted was getting all of the furniture in the house and set up. She simply did not have enough time to get everything set up without help. It turns out, she got help from the family who came over and picked up the old furniture. She reached out to them to see if they could help and they did! Again, adaptability was the key.
Isabel: They helped me hang pictures and make beds and do some other things. They were so thankful that I’d basically given them this whole house worth of furniture.
The Mom was a really interesting lady. The family actually buys land at auction and then resells it on the internet. So it’s just funny, the connections you can make and how the world works, if you put out your intention. I just asked for help, I thought, the worst they could say is no, but they were so happy to come over to help me. I was so grateful because I was really under the wire, just needing to finish with everything because I was physically flying out.
How about any big successes? Anything you learned from good outcomes that you can share that might help other real estate investors?
Isabel: We got interested in short-term rentals because we wanted a vacation place for ourselves. So we started looking at different areas in Washington and learning more about short-term rentals. We saw the potential to make money while owning a short-term rental.
We started crunching numbers. Learning the different rules and regulations. We were really inspired when we heard about Leti and Kenji’s short-term rental and that helped us focus our search area.
We were out wine tasting when I saw a property on Redfin close to Leti and Kenji’s short-term rental. I said, “Carlos, let’s buy this property”. And he said, “Okay, that sounds good”. So we were able to lock it up about four hours after it came on the MLS. The sellers were expecting to get a lot of offers, but for some reason, they just accepted our offer! So that was really great. When we saw the property in person, it checked all the boxes of what we were looking for.
Carlos: Isabel found the listing on Redfin. Isabel and Redfin had become very close friends. She said, “I found this property!” And I said, just make sure the HOA allows for short-term rentals.
It took us some time to get the property ready to rent. Part of this was not having our team in place and the other part was not knowing exactly what needed to be done. It took a few months, but once we got it listed, it has performed very well. The property is in a very popular area. It’s close to the mountains, close to the water, close to great hiking. So the property has a lot of appeal.
The one thing that really resonated with me is that when we go there, our kids love it. You can really relax there. So for us to be able to provide that experience for our family and our guests is fantastic. As a doctor, I know that healthcare professionals are used to only seeing people at their worst. We see them when they’re in pain, or when we’re giving a terrible diagnosis. So, you’re always surrounded by all this negativity. Whereas managing a short term rental is the complete opposite. Owning this property makes me really, really happy. I love knowing we’re helping families create happy memories. It’s really rewarding.
Where are you now in your real estate investing journey? What are your goals for where you want to be in 1 year, 5 years, or 10 years from now?
Carlos: Our goal is to have ten short term rentals within the next three years. Once we do that, we’d like to diversify back into long-term rentals.We would also like to scale back our day-to-day involvement in our short-term rentals using property managers. This will give us the time freedom we were looking for when we started this journey!
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2022 Update
Since the 2021 interview, we have kept the fire burning on our real estate journey. We currently own and operate 4 short term rentals in three different markets (Washington, Tennessee, and Alabama). Since we reached 500 hours of material participation in 2021, we were able to use bonus depreciation and get over $100K back from the IRS to help fund our next property. We currently have another property under contract in Tennessee that we plan on getting in service on time to bonus depreciate for TY 2021.
Isabel now only works one weekend a month. Carlos is still working the W-2 for now to maximize the opportunities for traditional lending, but the finish line is a lot closer now than it was only two years ago when this whole adventure began. We are considering geographic arbitrage as our next move, in addition to scaling our short-term rental business. We are also working on building better systems and processes so we can focus on working on our business and not in our business. Finally, we have benefited tremendously from the support of the online SRMD community. Seeing others succeed and learning from others’ experience has been invaluable!
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