Tanh’s Story: Investing in Yourself and Getting Started in Real Estate Investing

The following post was written by Tanh Truong, PharmD. Tanh graduated from the University of Cincinnati in 2017 and works for Kroger as a retail pharmacist. He recently acquired a two-family rental property in the suburbs of downtown Cinci that cashflows $400 per month and represents a 20% COC return! This is his story:

“You must achieve good grades; you must attend a good university; and you must major in a good profession. Then, and only then will you be able to secure a good job with a good income.” I’ve heard my parents repeat this so many times I began to hear it in my sleep. My family and I lived (and still to this day) frugally. We lived in a C minus neighborhood in a one-bedroom apartment from the day I was born (1992) until 2004. We saved every penny and in 2004 my parents were able to put a large down payment ($200K due to inadequate income for a loan qualification) on a single-family home in a B neighborhood. That was the beginning of a brighter future for my brother and me.

The predisposition my parents instilled upon me led me to completing a PharmD. program at the University of Cincinnati in April 2017. Mathematically speaking, two years of undergraduate plus four years of graduate studies would equal a six-figure income at the age of 24. It was the smartest and most time-efficient route – or so I thought. Looking back, I believe the pursuit of pharmacy (and a six-figure income) was a hindrance rather than a blessing. Here is my journey to this conclusion.

I’ve always had an interest in finance. I’m not sure where I obtained it – maybe from how frugal my family lived and my desire for more. But, that interest escalated during my first year of pharmacy school. We had a guest speaker who educated us about money management, and how to utilize our high (relatively speaking) salaries efficiently, since the majority of new graduates tend to spend lavishly. He introduced us to “Rich Dad Poor Dad” by Robert Kiyosaki and “The Total Money Makeover” by Dave Ramsey. I read “Rich Dad Poor Dad” first and the wheels inside my head started to turn aggressively. Naïve at the time, I was blinded from the real estate picture and believed the overarching theme was how to think differently. For example, the concepts of letting money work for you and asking “how” instead of “why”. Being immersed in the pharmacy curriculum (and having little to no money) I was forced to push the ideals aside for the time being. Shortly after, I finished “The Total Money Makeover” during my leisure time (and we seldom had any), and followed Dave Ramsey’s principles religiously with the exception of his take on mutual funds. He taught me how to save money assertively, and the idea that all debt is bad. This made me think real estate was a fool’s game while the stock market was the wise man’s play.

Eventually, I started to slowly learn more about the stock market and the greatest investor of all time, Warren Buffett. I began to acquire everything I could in relation to Warren Buffett, investing and the stock market. During this acquisition phase, a dear friend in pharmacy school (with my same mentality) introduced me to podcasts. This elevated my learning exponentially. I transformed my car into a learning station, which consisted of turning off the radio and having earphones readily available (old car so no connection capabilities). Every instance in the car was an opportunity to listen to a podcast. By doing so, I was able to learn about the characteristics of successful individuals, business ideas, and wealth development. Here is where I discovered BiggerPockets.

BiggerPockets changed my investing perspective. I read everything on their website, attended a few webinars, bought a few books, and listened to their first episode up until their most recent. Addicted would be an understatement. The idea behind leveraging debt and all the creative ways to build wealth mesmerized me. The knowledge I acquired showed me financial independence was not far from reach if only I were willing to work at it, and I am confident enough to say I am a hard worker. The biggest difference between investing in real estate and the stock market is controllability. I am able to physically control to some degree how my real estate will perform, whereas stock performance is dependent upon market psychology and the company CEO. The only catch with investing in real estate is the networking and extroversion requirement – something I could easily learn.

Fortunately, I was able to meet my like-minded friend in pharmacy school, and we started planning and attending local investor meetings. We read everything we could and shared what we learned. Through four months of self-education, we partnered in our first deal. Doing taught us a lot more than reading. Our first property was a small two-family in the suburbs of downtown Cincinnati in a C class neighborhood. It was relatively updated with new paint and carpet, but with outdated water heaters and furnace. It was listed for $89,900 and we bought it for $88,700 after inspection and counteroffers. We put in about twenty-four hours of sweat equity and $750 into getting the place rent ready. With self-management, this particular property cashflows $400 per month, a 20% cash-on-cash (COC) return. Although small, it was the beginning of something massive.

At one point, I thought pharmacy would be my career for the next forty years. “If I just put in 15% of my salary into my 401K, and live below my means I will retire at 65 with a few million to live on,” said my naïve mind. I’ve worked for Kroger Pharmacy for the past six years (interning included), and currently still do. During the past 10 months, there have been numerous changes affecting the pharmacy department negatively. In short, corporate’s message was, “We’re not giving you a raise nor extra help; work harder.” I always knew retail pharmacists were undervalued and overworked, but this has reached a completely new level. In the past, I found joy in making a difference in patients’ lives because I had the time to provide quality service. Now, I don’t have time to eat lunch and my morals force me to put in extra time so my colleagues wouldn’t be stranded. The quality of service to my patients has diminished, and in addition, more and more patients begin to treat us as their servants. Aside from the negatives, pharmacy has given me the opportunity to borrow money more easily, but that will change once the debt-to-income reaches a plateau. It has also allowed me to purchase properties quicker in a traditional sense. If I had my current knowledge six years ago, I would have probably pursued business or real estate as a career and employed creative financing in order to amass a modest investment portfolio.

In collaboration with my partner, our short-term goal is to buy and hold 100 units each cash-flowing $200 by 2023. We will achieve this goal through networking, acquiring small to medium multi-families, and eventually, 1031 exchanging up. At that point, we would be able to either leave our W2 jobs or at least go part-time. Our long-term goal is to syndicate apartment complexes throughout the United States, and the sky is the limit.

I hope my story does not paint a morose picture for the profession of pharmacy. At the end of the day, a retail chain is a business and it must make changes to achieve its goals. It just doesn’t bode well for the employee. If an individual were to pursue pharmacy for a career, I would strongly urge him or her toward the clinical/specialization route because there, he or she would be highly regarded and valued with a higher quality of life. This is where I believe the profession of pharmacy shines the brightest. I do hope that my paper trail has provided you with some insight and something to think about. Through the books I have read and the epiphanies I often have, I realized that time is indeed priceless because you only have a limited amount. I realized that life is too valuable to waste forty hours a week doing something you don’t necessarily love. My “why” is financial freedom by utilizing real estate. Please find your “why,” and ask yourself “how.”

Tips for getting started:

1. Learn
   1. Read everything and listen to podcasts. If you don’t understand something, ask and research. Hang out in the bigger pockets forum.
   2. “Formal education will make you a living; Self-education will make you a fortune.” – Jim Rohn
2. Network
   1. Attend your local Real Estate Investment Association (REIA) and talk to anyone and everyone. You will never know who is able to help you. You can learn something from anyone.
   2. Even if you don’t have any experience, reach out to someone who is experienced and see if you can add any value.
   3. Take out other investors for coffee just to learn more about their process.
   4. Build your team.
3. Plan
   1. Find out what type of investing is best tailored to you.
   2. Create a plan and a goal. Write it down and hang it up somewhere you often see as a constant reminder.
4. Practice

Begin searching on the MLS for properties and analyzing whether it will be a good deal or not. BiggerPockets has a great calculator that free accounts can use for a limited amount of calculations, or you can make your own. Try this video for more information!

Looking to take your Real Estate Investing plunge? Need help finding a realtor or analyzing deals? As always, feel free to reach out with questions or comments for Nate, the Real Estate RPH.