Mike’s Story: House-Hacking and House Flipping as a Full-Time Pharmacist

This article was written by Mike Blecker, PharmD, 2009 graduate from Long Island University in Brooklyn, NY. He completed a PGY-1 hospital pharmacy residency (general practice) in Chicago from 2009-2010.  Following residency, he moved to Philadelphia with his wife Krista for work as an evening shift Clinical Pharmacist at Hospital of the University of Pennsylvania where he still works and resides. He became board certified (BCPS) in 2011 and his primary areas of practice are in Emergency Medicine and Critical Care. He is a strong proponent of the Buy-Rehab-Rent-Refinance-Repeat (BRRRR) approach to rental property investing. This is his story.

During my grade school years, I grew up in South Florida and around 2002 my parents purchased a new home nearby to downsize.  The home needed a lot of cosmetic work (floors, paint, new kitchen and baths, some HVAC upgrades) but overall had good bones. In any event, my dad acted as the general contractor (GC), and got the work done in 2 months before we moved in.  I was interested in how this all worked, but wasn’t fully immersed in the process.  Fast forward a little and the real estate market was going nuts, home prices increasing (think pre-crash 2005).  At the point I left for school (August 2004), my parents were staying put.  However, as the months went on, they decided to leave South Florida in early 2006.  They could do this because the market was still rising and they determined they could retire early by selling their home (they moved to the mountains in PA), which at market rate at the time, earned them a hefty profit (which was rolled into paying for their retirement home).  That process I again found fascinating, how one could profit in real estate.  While in their retirement home, (which needed work) I would visit from college on weekends, work on the house (and 1 summer spent a lot of time helping) and learned a lot of DIY projects and handyman skills (my dad was very handy, owned a company with my mom and he installed window blinds and shutters for years). It was during this time in the mountains, my dad gave me some real estate books to read and learn more (on a very basic level) of how to renovate a home to build up its value, rent/sell it, then roll that into a new property and repeat (later coined the BRRRR method); shortly after though, as we know, the market tanked.  My parents were in good shape since they used the profits from the FL home to pay for their retirement home (which they owned essentially outright).  For me, I was only half way through pharmacy school, so I stayed focused on my coursework, but kept the real estate interest on the back burner, thinking maybe in the future I would get involved in some manner.

Flash forward to 2012 and I’m in Philadelphia, reading a bunch of real estate books as a hobby, browsing for deals on Realtor.com and I decided I want my first home to be an owner occupied multifamily property. My goal was to buy a triplex, live rent free, and be able to pay down our student loan debt (Hello House hacking!). My wife thought I was a little crazy, but was on board with the plan after I reviewed the pros/cons with her.  I was very handy at this point and her father (a semi-retired contractor) agreed to help us with a lot of the work.  After searching for nearly a year, we settled on a duplex, which I estimated, with rental income from the 1^st floor (1 bed/1 bath) apt, would pay 2/3 of our mortgage. The big sell for us on this place was a 2 car garage and roof deck (connected to our unit), which is unheard of in Philadelphia.  At the time, I also closely followed the neighborhood the property was located in, and determined prices would continue to climb as new construction and restaurants were within a few blocks.  We purchased the property May 2013 (which needed full renovations throughout), gutted the place and moved in (still with 20% finishing touches to work on while living there) in August 2013.  It took another 3 months to get the rental unit ready, but when we did, we had a fully finished duplex property with new electrical, drywall, floors, kitchen, etc. with high end finishes and rented the first floor apartment for $1100/month (above market rate for the area at the time).   After getting the unit rented and being happy in ours, the last thing to do was rehab the garage (which we had been putting off as it required a full tear down and rebuild and was quite expensive).  During this time by the way, the Philly real estate market exploded and homes were being rehabbed or newly built everywhere, particularly in our neighborhood.  So, in Summer 2016 we did a cash-out refi since the rates were great (3.5% interest) and used our sweat equity to pay down student loan debt and rebuild the 2 car garage with a new roof deck.  We loved living in the property, but after a year went by and we had our 1^st son, Grant, we were becoming cramped on personal space.  At this point I had also recently purchased a single family row home as an investment property and that was rented out, cash flowing $400/month.  Being short on space (and in a great personal place to sell), we decided to relocate to the burbs and sold our duplex to a friend of mine as an off market deal (who only wanted it for the garage J) and used the equity gained, to put 20% down on our new larger, SFH, in the suburbs outside Philadelphia.  Some people debated whether we should keep it as an investment, but for the area and what it appreciated for, we decided to not be greedy and sell it with a nice profit and move onto another project. Besides, selling at this point, we avoided capital gains in purchasing our new home and we knew it wouldn’t appreciate much higher for another few years.

Being a pharmacist helped financially of course pay for the first place, but it was the sweat equity and appreciation in housing values that really propelled us forward to (1) pay down student debt which is/was our primary goal, (2) buy another rental property and (3) be able to move up to a larger home without putting any additional money of our own, down.  This was a big WIN WIN WIN for us and after speaking with my wife about it more, she gave me the go ahead to start a real estate company and continue FT as a pharmacist, but part time (PT) real estate investor.

My new goal over the next 12 months is to do a few flips, generate capital, and expand our portfolio by acquiring long term rentals (mix of SFHs and MFHs).  Within the next 3 years, I would like to be able to go part-time as a pharmacist and use my off days to do real estate investing.  Long term, the focus is on supplementing our income with rental properties to have a more flexible schedule to spend time with my family.  I don’t want to be tied down to a job where I have to work weekends and holidays, or worry about picking up extra shifts to pay for things.  I want to have our student loans cleared within the next 5 years and continue to live a simple, enjoyable life with my family.  It’s all about having the ‘off time’ to do fun activities with your family and friends on weekends, holidays, etc.  For me, I feel that real estate investing (REI) is the way to accomplish those goals.

My tips for pharmacists looking to get started in REI:

• Read, read, and when you’re sick of reading… continue to read! Learn as much as possible via real estate investment books, bigger pockets, etc.
  • BE THE SPONGE à meet with, shadow, and learn from current REI gurus and focus on what works and doesn’t work
  • Read a variety of bigger pockets (or other forum) posts on investing and issues people have run into, in order to learn from mistakes and plan ahead for your first (and next) REI property
• Develop your team
  • Who’s doing the renovations? You? Hired general contractors? Meet them now and build trust with them, even if it’s only for little jobs.
    • “You get what you paid for” is very true in this case. Quality workers that show up on time and keep their word cost money. Just because you’re paying significantly less doesn’t mean you’ll get a better deal!
  • Develop systems for renovation:
    • Know where you can purchase supplies at a discount and replicate a similar design for homes in your area that attract buyers (read: know your market/buyers or renters)
    • Don’t waste time shopping at 10 stores for the best tile deal. Look at 1-3 stores at most, then you can consistently shop from there.  Sometimes I found better deals at the local Home Depot, etc. too.
  • You won’t move quickly in REI using your own money (unless you have a large inheritance or win the lottery) so network with family and friends. You would be surprised who approaches you to act as a silent financial partner. OPM (other people’s money) is what will help propel you forward with acquiring properties and rehabbing them faster.

Mike’s Real Estate summary (as of Sept 2017):

• BRRRR owner-occupied duplex from 2013-2017 (sold and upgraded to large SFH in suburbs)
• BRRRR SFH rental property (still owned)
• Currently doing a flip in south philly (3/1, 1000 sq ft row home). To be listed by October 2017