JF1847: How To Leave Your Job In 2 Years Through Real Estate Investing with Anna & Ken Hummel
Anna and Ken are a husband and wife team, who are both military veterans and now full time real estate investors. When they finished with the military, they held W2 jobs while also getting into real estate investing. After just two years of investing, they were ready to leave their jobs and be full time investors. We will hear how they were able to do that in a short amount of time. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
Best Ever Tweet:
“It’s not glamorous and it’s not easy” – Anna & Ken Hummel
Anna & Ken Hummel Real Estate Backgrounds:
- Veterans who are just now getting some skin in the real estate game.
- They have 6 rental units, working on first flip, have left W2 jobs behind in just two years of real estate investing
- Based in Colorado
- Say hi to them at https://www.facebook.com/AKhomesLLC/
- Best Ever Book: The 4 Hour Work Week
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Theo Hicks: Hello, Best Ever listeners. Welcome to the best real estate investing advice ever show. I’m Theo Hicks, and today I’m speaking with two guests, Anna and Ken Hummel, who are joining us from Colorado. How are you guys doing today?
Anna Hummel: Good, how are you doing?
Ken Hummel: Awesome, it’s a gorgeous day in Colorado.
Theo Hicks: Yeah, I’m down here in Tampa; it’s a gorgeous day as well. A little hot and humid, but I can’t complain. Before we get started, a little bit about Anna and Ken – they are veterans who are just now getting some skin in the real estate game. They currently have six rental units, and they’re working on their first flip. They have left their W-2 behind in just two years of real estate investing. As I mentioned, they are based in Colorado, and you can say hi to them at A&K Homes LLC on Facebook.
Can you tell us a little bit more about your background and what you’re focused on now?
Ken Hummel: Yeah, so a little bit background on us – like you said, we’re both veterans. When I was in the Army, I was an engineer, so I learned a lot of my construction knowledge and trade that way. Then when I got out of the army, I took a job as a construction superintendent and learned even more so about building houses, and how houses work, and everything. I also kind of built a network, got to know a lot of people, got to learn a lot of good skills and trades, so that’s helped us out moving forward… And primarily, it’s helped us out together, being how I’m more of the maintenance and upkeep and the physical work, as Anna does most of the business aspect of it, marketing and advertising, which she can tell you more about.
Anna Hummel: I guess for me, what I do the most is all the business aspect of it, and I really just make sure that I’m marketing my properties. I’m looking for good deals, and seeing how those work out for us.
Ken Hummel: In the Army you were…
Anna Hummel: Well, I did four years active duty, and that’s how me and Ken met. Then I did supply and marketing for the army, so that really helped me. I got out of the Army and got my bachelor’s in business.
Theo Hicks: A couple of questions, based on what you said… I definitely wanna dive into the fact that you guys were able to leave your W-2 jobs, because I know a lot of people become interested in real estate investing for that fact alone. But first, since you guys mentioned your military background, I was wondering if you could tell us about any skillsets that you learned through your time in the military that have helped you invest in real estate better?
Ken Hummel: I think that’s more or less a traditional skillset as far as problem-solving and critical thinking. Always working through issues and not accepting no as the final answer; always figuring out “Well, I want this. Even though you say no, how can I change my question, how can I change my presentation and my outlook on things and work towards what you want, no matter what the difficulty is and what you have to overcome?”
Theo Hicks: What about you, Anna?
Anna Hummel: I think the same thing – being able to learn how to overcome things. There’s a lot of times where we get put in really crappy situations, and we have to learn how to get through them. I think that helps a lot with real estate, because there’s a lot of things that just come up that we don’t know how to overcome… And we figure them out.
Ken Hummel: Yeah, and like Anna said, it’s got a lot to do with confidence. Even though we’re just getting into it and we haven’t exactly done every little thing, that’s fine. Give it a shot. See if it works out. If it does, great. Take notes. If it doesn’t, still take notes on what you could do better and how you can improve. It’s a constant improvement through reaching out and stretching yourself, expanding yourself to be something more than you currently are.
Theo Hicks: Let’s talk about one of these crappy situations that you faced in real estate. Can you maybe outline some challenges that you faced, either starting out, or more recently, and how you overcame that challenge?
Anna Hummel: In December we purchased three different homes, all at once, and then quit our jobs the day of the closing. Three days later, one of those houses flooded, and that was one of the scariest things that we had seen… Because we didn’t know if we made the right choice of giving up our jobs and buying three homes at once, and how much it was gonna cost us to fix this flood. The house was flooding for three days, so it was pretty big damages that were done to that.
Luckily, our insurance covered that one, and that was how we were forced into our first flip. It’s still a hassle, we still had to put a lot of our own money into it, so it wasn’t really the best outcome, but we’re getting through it. We didn’t give up on real estate because we had one bad experience.
Theo Hicks: Yeah, those types of challenges are the worst, when it’s not really your fault that the property flooded; it’s just something that happens… And it sounds like you guys figured it out. Best Ever listeners know about my flooding story from my first property, so I can definitely relate with you guys on that one.
Anna Hummel: [unintelligible [00:07:08].12]
Theo Hicks: So let’s transition into talking about — as you mentioned, you purchased those three homes at once, and then quit your jobs that day of closing. As I mentioned before, I know a lot of people wanna get into real estate for the potential ability to leave their W-2 jobs… So can you walk us through that process? …not only the financials, how much money did you need to bring in in order to quit your jobs, but more how you came at the decision from a mind’s eye perspective, if that makes sense.
Ken Hummel: Yeah, sure. We’re pretty fortunate that through being veterans we utilized the VA loan, which allows us to purchase properties with zero down. It’s not as glamorous as everybody would think it is, but I’ll start with the first property. We used my VA loan… So it was a four-bedroom. I rented out two of the rooms to friends of mine, and then we stood in the master, and then while everybody was living there, I also remodeled it. So people were constantly walking over construction work. It’s not glamorous, it’s not easy. You’re sharing the living space with a bunch of other people, and on top of that doing construction in the same spot you’re living…
That continued to a second property we purchased, which was using Anna’s VA loan, which was a fourplex. We were able to rent out that first house that I just mentioned to you, then move into the fourplex and live in one unit, and rent out the other three. While we lived in that one unit, we downsized to a small two-bed/one-bath, 800 sq. ft, and that’s another one where we constantly were doing construction.
At one point, I was working on the bathroom and tearing apart the bathroom, and that adventure took about a week, so we went a week without the only bathroom in the place… As well as sacrifices like — I had a fancy truck I used to like to drive around, and decided that it was more important to take the equity out of that vehicle and I bought a 17-year-old vehicle instead, that just gets me from point A to point B and allows me to do what I need to do. Anna also did the same thing, and she traded down her car…
We took advantage of other things, like my Roth IRA. I also was able to cash out the initial investment of that without any penalty… And kind of went all in with what we had been saving up, what was supposed to be our retirement fund, and move it into our now-retirement fund, which is real estate.
Theo Hicks: So did you have a number in mind? “We need to bring in X amount of dollars in rental income before we quit”, or was it more of a “Let’s just go all-in and do this full-time, and figure it out as we go along”?
Ken Hummel: There is planning involved, at least for us. We did our cost analysis of what we do for a month in as far as what the mortgage is, cell phone bills, gas, insurance, food, what the minimum is for us to survive. Once we figured out that amount, figuring out how we can get to that, it helped that when I was in the Army, I knew how much I could live off of there, and how much I was able to put away for savings and move forward, so we were able to go off with that number and more or less move forward.
Theo Hicks: So when you bought those three properties at once, that’s when you knew you’d hit that minimum monthly expense, so you guys knew 30 days out you’ll be able to quit your jobs?
Anna Hummel: Yeah, pretty much. And we did account for our house that flooded; even before that, during the process, we kind of were like “I don’t know if this is gonna be a great deal, but it’s in a great location”, because it was right by the army base here. So we kind of went with that, and added the mortgage into our monthly expenses of what it would cost us.
It’s kind of nice that we did that and then we had the flood, because we kind of already were expecting to pay that mortgage out of pocket.
Theo Hicks: Alright, thanks for sharing that story. I think a lot of people will get really good advice and information out of that if they are looking to quit their jobs, from a high-level perspective. So before we get into the money question, I did wanna ask “What are some challenges and what are some benefits of working with a significant other in real estate?”
Anna Hummel: We actually work really well together only because Ken leaves me to do all the management stuff. I’m really good at the property management, and Ken does all the construction stuff that I don’t know how to do… So we kind of do our own thing, but still work together.
Ken Hummel: I think it’s important that you divide your responsibilities, and if the current task at hand is the responsibility of the other, then you respectfully allow that other to make all the decisions for that situation.
Obviously, still being there to help and assist, just dividing responsibilities and understanding the roles is what helped us get through everything so far.
Theo Hicks: Okay, what is your best real estate investing advice ever?
Ken Hummel: Well, I think paralysis by analysis is a common phrase that I heard numerous times, and I will support the idea behind it. We’ve spent a lot of time just over-analyzing properties and thinking “Well, if I do this, then that might happen. If that happens, then this will happen.” You’re constantly over-analyzing, running numbers again and again. “Well, this property isn’t quite right. This one isn’t 100% what I want.” You spend all this time over-analyzing things and you never move forward. There are certain situations where getting 80% of what you’re looking for is still better than where you’re currently sitting. And to move forward on something is better than doing nothing.
Theo Hicks: What about you, Anna?
Anna Hummel: We talked about this question beforehand, and we kind of came up with that answer together.
Theo Hicks: Okay, perfect. That is good advice, and it’s something that you never really get over either, so I completely agree with your advice, especially when you talked about — not necessarily waiting for that perfect deal, because it’s probably never gonna happen… And finding something that’s good enough and moving forward with that. Kind of just getting your feet wet, at the very least.
Anna Hummel: Yeah, and we talked about that question just because Ken likes to think about things a little bit too much, and I’m more of a “Let’s just do it. It’s worth it.” We had that situation with the house we’re living in now, where it wasn’t our 100% home, but it had most of the things that we wanted… But it got us out of our jobs, and now we’re able to do more with investing, and that helped us up a lot.
Theo Hicks: Alright. Are you ready for the Best Ever Lightning Round?
Ken Hummel: Let’s do it!
Theo Hicks: Alright, first a quick word from our sponsor.
Theo Hicks: Alright, what is the best ever book you’ve recently read?
Ken Hummel: I’ve recently read the “4-Hour Workweek” by…
Theo Hicks: Tim Ferriss?
Ken Hummel: Tim Ferriss, yeah. I really appreciated that. It helps put in perspective how you can more or less leverage your time properly to give you more freedom.
Theo Hicks: Alright, besides your first deal and your last deal, what is your best ever deal that you’ve done?
Anna Hummel: Our best ever deal, I would say, is our fourplex that we purchased. One, because we were able to use our VA loan. We got a fourplex with zero down. And that one probably brings in the most income for us.
Theo Hicks: I’m kind of gonna go off-script here before I continue the Best Ever Lightning Round, but I just thought of this – how do you analyze a deal when you’re not putting any money down? Because technically, any cashflow over a dollar is unlimited ROI.
Ken Hummel: That’s a good question. For us, what our standard is and what we’re looking for – because there’s lots of deals out there, and getting into (let’s say) a duplex that breaks even every month, with the consideration of all aspects and things, those are out there. There’s also other multifamily properties that break-even or even give you $200 per door a month. Our story, and the reason why we chose that fourplex, was we were able to live for free. The three units provided enough to pay the mortgage for us to live there. And while we lived there, we renovated, and then as other people moved out, we renovated those ones and moved those ones up for higher amounts.
For what the mortgage is, I think we’re pulling in close to double that for rent. So we’re making 200% off of that. I mean, zero down though, so it is infinity, but for what the cost of the monthly mortgage is versus what your income is.
Theo Hicks: Alrighty. What is the best ever way you like to give back?
Anna Hummel: We recently got involved with the Military Investor Network, so we like to help out with those. We just had a meetup last Saturday, and got involved with helping other military, just because that’s where we could help, as we understand how the VA loan works and what we could get out of the VA loan. So we’ve been helping out with that, trying to get other military personnel involved in investing.
Theo Hicks: And then lastly, what is the best ever place to reach you?
Anna Hummel: My email address or Facebook would probably be the best way.
Theo Hicks: Okay, and for Facebook, that’s A&K Homes LLC. Alright, well I appreciate you guys stopping by today and telling us about your background and what you guys are focused on now. Just to summarize what you guys discussed – we first talked about some of the skillsets you learned in the military, that have helped you invest in real estate. You mentioned the problem-solving, the critical thinking skills, not accepting no as an answer, working towards something that you want and keeping that top of mind, and of course, learning how to overcome things.
One of those examples was when you talked about that crappy situation you guys faced, where you bought three homes at once and you just quit your jobs, and one of those homes was flooding for three straight days. Fortunately, your insurance covered the damage, and it forced you, in a sense, into your first fix and flip. You did have to put some of your own capital into the deal, but the main lesson there is when you are met with some challenge, just figure it out and don’t give up on real estate just because of one roadblock.
We also discussed your approach to quitting your jobs, and you talked about how you were able to leverage that VA loan to purchase properties with 0% down. You gave the example of your first few deals. You also talked about how you had to sacrifice certain things that you probably didn’t want to sacrifice – the example you gave was having to trade down your vehicles, and as well as essentially liquidating you previous retirement fund, which was that Roth IRA…
And then from a strategic standpoint, you talked about how you did that cost analysis, and essentially calculated what’s the minimum amount of money you will need to bring in each month to survive, and then once you had that number calculated, you created a plan of action to get to that number. Then we also talked about how you guys were able to work together as significant others, and your advice was to split the duties, and whoever is responsible for task A, they kind of have the final say on what happens, obviously with the help of the other.
Then lastly, your best ever advice was about the paralysis by analysis, and something that Ken said that I really liked was getting 80% of what you were looking for is better than where you’re currently sitting. I couldn’t agree more.
Again, I really appreciate you guys coming on the show today to talk with us. Thank to everyone who is listening. Have a best ever day, and we’ll talk to you soon.
Ken Hummel: Great, thank you.
Anna Hummel: Thank you.