As a college student dealing with mundane lectures to seeking internships, thereâs a lot jam packed onto studentsâ plates and this stage is arguably one of the busiest times of oneâs life. Not by choice. Once you become older and graduate from school, you now have the option to determine how hard you want your life to be and surprisingly, most people choose the hard route and then complain about it. Itâs just like with time. Most have no idea where it goes all day but end up complaining they want more.
As an adult, you can commit working 80+ hours at a grueling banking, consulting or ping pong table type Silicon Valley tech job, manage several rental properties and tenants, tackle on some kids, divi up family and alone time, finances, bills and of course deal with the dreaded insurance and taxes, two things you will have to face if you want to grow your wealth and have somewhat of an exciting one. It all adds up quick.
The more you own and longer you live, the more taxes and insurance you must pay to support yourself. Luckily, if you take good care of your health and set up healthy habits early which is hard to do in college when the dining hall is in every building and you feel the urge to stay cool and waste money, thereâs a lot of pressure to not care about yourself and instead your image.
I certainly felt pressured at times dating back to HS with various things. But didnât we all do stupid things that we wish we didnât? I like to live with no regrets. Luckily, I had the willpower to go against the crowd and never be tempted to drink, smoke or even go to parties, only occasionally if I knew my work load would be light for the next 2 weeks. I know, call me a book worm. I take that as a compliment now.
My mom even paid $300 for my graduation party invitation at a country club and I didnât even end up going. I listened to my favorite podcast, âSomething You Should Kkowâ(Not sponsored just a daily avid listener) instead to remind me how much I really need to know more after learning nothing in school. I didnât want anything to do with those awkward HS days and waste of years. It was time to embark in the real world which led me to real estate.
Emotional Estate
I take my health seriously becuase I know health is welath. As Iâm in the midst of applying to internships for next summer, yes, next summer 2022 already, Iâm seriously thinking more and more about my health and what job provides the best work life balance. As you know, I write about everything personal finance to self help related and health insurance is one of those things that you cannot avoid. How stupid is this: people pay double for cigarettes and alcohol each year adjusted for inflation and are still fine with paying a higher premium for health insurance later on in their life.
I understand these people have an addiction and craving so bad that they only think about the present moment, not so much in the future, but starting earlier than later with how much you believe your health is worth will put you on the best track to not being succumbed to paying at times upwards of your full salary on insurance just for being unhealthy. Plus, Iâm sure other things in your life such as relationships, weight and work ethic are effected as well so if I were you, that is my New Years Resolution that should never end.
Today is officially the first day of second semester of my sophomore year. It is bizarre how 3 out of the 4 semesters that Iâve been in college have been online. Certainly not the experience I was hoping for or else I might as well have signed up for Phoenix University, where they adopted the online system since the internet was formed. On the NYU application, applicants are posed this question: âWhy NYU?â Most, if not all students state the city as their answer, their fantasy dream and having it taken away is practically like not going to college at all. What is NYU if there is no NYC?
Big Apple Roots
Yet, quarantine has been a blessing in disguise for me and since Iâm in NY already, it doesnât make a difference. Iâve saved over 20 hours of waiting in line to commuting which I put all back into my businesses. For any emergency, cash is king. Since my family has always believed in cash, allocating no less than 5% of your portfolio to cash and rather between 10% and 20% on hand at a minimum along with a 6â12 month fund of living expenses for any emergences, it has allowed us to have a stable cushion for any downhill, such as this one we are still living through a year later.
Weâve always believed in the mantra, âplan for the worst, hope for the bestâ because the only thing that is certain is uncertainly. If you get a flat tire and wished you bought insurance, you cannot because you can only buy it in advance hoping you wonât have to use it.
Single Lady Habits
When it comes to my familyâs other income sources, we own several rental properties in Westchester and the city and my own individual property in Greenwich Village to boost my own income. As an only child, Iâve always been independent and I can credit it all to my parents for reading the WSJ with me at age 10 and teaching me how to be mature. Iâm extremely grateful Iâm an only child because with siblings, I probably wouldnât have learned as much. But we can all say the same for our situation if we have siblings or not. I believe I have a unique motivation that gets me up and running at 5am, half my day done by noon, follow a strict intermittent fasting and whole foods diet, not a party nor soical media gal and knows how to control sugar, phone cravings and emotional rollercoasters.
This is all learned from being with my parents 24/7 for about 17 years. Following their footsteps, learning how they work, what they read, how they spend their free time and what they do on the weekends that all have a direct correlation to their success.
If you look at the most successful people on the planet they follow these exact steps:
-Have me(alone) time
-Exercise at least 30 minutes a day
-Talk, call, interact with someone daily
-Eat healthy
-Mediation/journal
-Sleep at least 6+ hours a night
-Drink lots of water
-Limit screen time when can
-Love reading and educating htmselves daily
-Value family and friendships
-Prioritize financial and digital literacy
-Donât waste themselves on money, drugs and materialistic things(sure money can inhibit those feelings and there are thousands of celebrities whoâve gotten addicted but the real warriors can control themselves)
-Use money to buy time instead of things
-Would pay someone a lot to waste their time
There is no guarantee that working out and eating right for 60 days to build a habit will turn you into Bill Gates but it sure will make you feel a certain way to go work to purchase that property you always wanted. When you feed your mind and treat your body right through putting yourself first, you have a different perspective on life. This might sound cheesy but itâs true. Baby steps, consistency and patience, thatâs the best way.
These skills have not only allowed my parents to manage their rental properties with diligence and patience, a key skill when viewing candidates and going through thousands of resumes, recommendations letters and files to see if tenants are legit and reputable and most importantly, wonât unexpectedly leave if another lockdown happens or if they loose their job along, they have all directly helped me apply those skills myself.
The Studio
After seeing the immense amount of returns each and every month from our 3 properties valued at a total of roughly 10m with an average income of $8k per month per property, including maintenance such as heat, electricity and property taxes valued at 17k per year, this convinced me that New York is never dead. And with wealthy NYC NYU kids gone, 1000 sqft studios are the most popular.
With rock bottom mortgages, thereâs absolutely no better time to borrow than during a recession. I know, hard to believe. Unfortunately, the economy and stock market arenât correlatde hence only those who are truly prepared for the worst and are serious about planning during the good times, are able to take advantage of these money boosting advantages.
I guess it makes sense.
You work hard when everyone else is partying or having fun and then during the bad times, you have nothing to worry about besides finding the right Netflix show or another deal on the market after that extra effort you put in in hypothesizing the worst. Not a bad return considering that you can profit off of a few properties when most Americans are trying to pay off their mortgage for their primary residence.
What brought me to conclusion to purchasing a property were a few things:
-Low mortgage rates at historic lows
-I knew people who couldnât previously afford the city now can and are taking advantage of renting
-Unless it is the housing bubble and even in that case if you still held on to your property it wouldâve gone up because real estate always appreciated in value. It is the most popular way to accumulate income for the rich and rarely goes down in value. It is an investment that you can keep forever, no need to pay capital gains on returns, positive cash flow, tax advantages, and leverage on a tangible not imaginary asset. As opposed to stocks where one company can tank anytime, unless thereâs a hurricane or earthquake and in which case in NYC, that never exists, the building will always stay in tact and put together, only a few paint jobs and renovation here will make it brand new and another way for you to increase the value of the home while counting it as an expense!
Where Did This Money Come From?
How I was able to afford this apartment is no surprise. Donât worry, Iâm not a trust fund baby. If you want an in depth look into how I made enough money to fully support myself by end of HS, you can read that here.
First off, it is becoming less uncommon to see younger generations build more wealth than their parents. This is all thanks to the internet. Due to its prevalence, I was able to take advantage of everything I could and think outside of the box while my friends went to the mall, places I avoided as they were big money and time wasters. Time = Money after all.
As outlined in the article my main sources starting at age 10 when my parents educated me include:
-Roth IRA contributions-took advantage of compounding once I started earning over 4k per year
-Summer, winter break jobs tennis coaching(very lucrative I made upwards of $200 + tip per hour at a few select country clubs in the Hamptons and Westchester)
-4 free year tuition for college through scholarships-no need to pay for college or deal with student loans
-Living the stealth wealth way
-Dividends and active investing via options and large bets-I was lucky to earn more than loose
-Passive investing within ETFs and Index Funds that simply track the major indices
-Side gigs such as tutoring international students, my blog, modeling, babysitting, re-selling my old clothes/materials/merch/furtniture, working as a sales rep, dog walker, teaching CPR, copywriting and grocery deliverer for Trader Joes fanatics
-Living a frugal, minimalist lifestyle-never kept up with the trends that would make you broke
-Never owned a car
-Corporate internships for the past 3 summers
Debt
I have a love hate relationship with leverage. With a property that means setting up a mortgage to pay back the home in the next x amount of years with putting as little down, 20% is recommended, as possible. I believe having a morgtage is equivalent to renting. Yes, you signed the paper work, put the minimum amount of deposit down and it is titled in your name, sure, but until you actually pay down that mortgage, it is still the bankâs property! If you canât pay it back, not only your credit score tanks because you proved you were unreliable and untrustworthy for another mortgage in the future, they will take it back and turn into a foreclosure.
A mortgage is a hassle because it is a lot of money down the drain. It is almost equivalent to renting per month. So if you are planning on purchasing a place, although I understand having $1m or more in cash seems a little bonkers especially since you could use that money to reinvest and grow in the stock market, it is yours to keep. You donât know how the stock market will do even though the major indexes such as the S&P and Dow have consistently gone up historically yoy (year over year) but intra day volatility is real, especially these days as memories of the dot com boom are becoming more and more real as retail day trade investors and hedge funds are betting on stocks that have no reason to do well in the future such as GameStop, AMC and BlackBerry. Pure gambling.
No Mortgage, No Problem
My parents have never taken a mortgage on any of their primary residences because with all the places theyâve lived in the city, maintenance has been on average $3k per month along with NYC taxes, so a mortgage would be too much of a pull. They didnât want to sacrifice their daily expenses such as commuting and taking advantage of the great NYC attractions for a mortgage so they paid in full. But when it came to our rental properties, yes, because that would be too much cash down the drain.
Thereâs nothing wrong with a mortgage. Cash can be seen as silly for some but after seeing a CNBC Make It YouTube video one time of a Millennial couple putting down 10% on their 1.5 million dollar property having to pay 150k for 10 years straight, might as well just rent! Money down the drain either way and youngsters like those are most likely never going to live there for 10 years!
Why A Property?
So you may be asking, Mia, why in the world would you need to add more to your plate? Didnât you say you are already busy with school ,internships, your other side hustles that take up less of your time and easily pay you more per month than the average rent of $2300 in the city?
Yes, but as Iâve learned from my parents, being independent is the best feeling and buying a property in the city now is the best deal you could get.
If you check out Zillow anytime and view the financial history of virtually any property in NYC, they all youâll see they all went down by at least 20â40%. Pretty considerable amount which did make me worried if NYC is dead but since there is more supply than demand, this is a great opportunity to buy a fixer upper, charge a college or Millennial a decent price and let them enjoy the city for the first time while having an incredible landlord like myself. Whatâs better than that? No wonder NY has never been this young before. Every time I walk on the residential side of 5th Ave, the âold peopleâ avenue as I like to call it where billionaires and the older generation lives, I see hip millennials from Texas and South Carolina living their dream because NYC wonât bee this cheap for long!
Tenant Search
Luckily as someone who always loved working because I never treated it like work, my first resort was to reach out to my friends and colleagues from the corporate world who were old enough to buy a property in the city. I didnât bother with my friends since they still live in the dorm or at home for the semester. This saved me upwards of 8k instead of going through a broker. Yes, rental properties are a big investment because it deals with your time yet in the end, itâs more than rewarding if you found someone reliable yourself. Even compared to taking part in the stock market, I wouldnât have earned this recurring POSITIVE passive income and there is no volatility involved unless you get a phone call a water pipe broke or the toilet got clogged and in that case, just charge your expenses to your business and call it a loss so its essentially free!
How I Found Him
As mentioned, Iâve worked in the corporate world starting at a young age. By 16, I wanted to gain practical real world experience and was the youngest intern at several firms. Iâve never been suited for school and wanted to venture out and see what the rest of my life would really be up to.
Instead of just taking the easy way out and interning at my parentsâ firms, I wanted to do my own investigating and cold outreach to HR. They were all impressed by me, most didnât reply but some saw my eagerness to help out and took a chance on me. FYI, if you are curious how much knowledge you really need to know, drop that. IQ doesnât matter. If you have patience, persistence, and positivity, the 3 Ps, youâll get a job anywhere. Networking doesnât even work in some cases so donât beat yourself up if you donât get somewhere. You were most likely competing against the hiring mangerâs son.
They took a chance on me because wrenât we all just a chance? No one is always perfect or right for the job. The company just believes you will be a good fit, save them money, hassle and provide something so they hire you.
Same deal with me. Every day before and after school I would work on the software and trading desk interning company to company every summer since HS. I wasnât able to take advantage of any country club memberships or summer camps after MS because I was just too busy getting more pale in the office but I truly loved it. With new connections, free food and a multitude of skill sets learned each and every day, I wouldnât have traded it for a popsicle by the pool at the country club any summer day!
Tenant Hunt
Thatâs where I found my first tenant. A guy I used to work with at a startup was planning on transferred to the Nashville office a few weeks after we met. We didnât know each other that well but since we were squashed together like sardines on the same floor, we got pretty close just by being there 9 hours a day.
Heâs always been a squatter. Moving from place to place always loved traveling and had a dangerously wild relationship to NYC. It never hurts to get to know anyone. Iâm always open to meeting anyone because you truly never know when someone will pay your bills for you. Literally!
Stop being judgy and get out of your comfort zone. And most importantly, never ask for anything in return.
Price
When it came to purchasing the property, as everyone should do, I had a strict budget. In this circumstance since Iâm young and have a long time horizon, I stuck with 30â40% of my overall net worth, roughly 38% in this case. Once you grow your worth, I would recommend having more as real estate rarely depreciates and always returns since you always need someone to live there after all.
Without disclosing too much of the details, I purchased this studio for around 375k in Greenwich Village near NYU with no mortgage. I prefer not to have one because along with taxes, renovations and maintenance costs, I felt I was giving away enough. I didnât need a pesky 30 year mortgage to worry about. Since my net worth will soon pass the 1 million park in a few months if the stock market continues to rally as planned-doesnât look too hopeful these last two weeks with the halting and volatility due to day trading with no fundamentals involved, but thankfully with a 75/25 spilt on passive and active management towards my portfolio, ETFs and index funds are keeping me comforted and positive. If 2020 blew it out of the park, I have no doubt 2021 will with vaccine distribution efforts on the rise and Biden as commander in chief, I believe investors will have another successful win.
Now after just blowing 400k on a studio that surely needed a paint and appliance job because believe it or not folks, that wonât provide you much in NYC. With the new fridge and nest thermostat costing roughly 4k, I was now officially left with a shiny brand new apartment that could be leased out to my colleague from Nashville. What a good feeling. It felt like mine but I couldnât live there.
I was surely lucky in this circumstance to find a nice colleague at the right time at the right place from years ago to reconnect with. Connections are everything.
Stability
Hopefully my renter stays at least 3 years. With his love for the city, he hopes to work here permanently not traveling and coach hunting every few years living out of his suitcase, so thatâs a great sign. I would rather have a stable renter and not increase rates that pays on time and is reliable that doesnât keep me in the dark if something is wrong, which he doesnât, then increase rates every few years on new renters.
When it comes to my living expenses, I barely have any because I live in my parentâs home. Housing is one of the top expenses for Americans so itâs nice to manage a property while not needing to pay for one just yet! The rest of my expenses are low because we rarely eat out since we prefer making food at home rather than filling our tummies with greasy sodium packed carb loaded food at restaurants but especially now, any chance we can get to support local, we go for it!
As a New Yorker, you may be asking, my top pick? As a health nut, Iâm going to recommend HUMAN (not sponsored). Even if youâre not in the city, you can still take a bite by ordering their delicious vegan, guilt free chocolate online or other delicacies! I promise you this is the only chocolate that wonât melt in the box! Iâve tried many before. I also exercise at home on my bike. Food and the gym used to be my biggest expenses until I realized not only how much I could save per month, how much more time and skills Iâve obtained from cooking and riding on my own not in a class.
Thatâs it folks! This piece was much longer than usual but I hope my financial journey has encouraged you to live a financially free life out of debt, liabilities and stress. And yes, I told my renter I will be writing this piece. As always, the best way to get out of any situation is through education. Prioritize it and you can get anywhere!
I hope you learned something.