JF2016: Sacrificing Short-Term Satisfaction For Long-Term Happiness With Mark Owens
Mark Owens is from Baltimore and has been an active full-time real estate investor for the past 14 years, owns over 100 units, 200 wholesales, and self manages all of his units. Mark believes his secret to having success and having more options than most investors is all due to the way he views decision making. He shares some great examples of how he has been able to separate himself from the heard of real estate investors when it comes to making decisions.
Mark Owens Real Estate Background:
- Active full-time real estate investor for 17 years
- Owns over 100 units, has done around 200 wholesales, self manages all units
- Units comprised of single families and 7-18 unit multifamilies
- Based in Baltimore, MD
- Say hi to him at https://markowens.com/
Best Ever Tweet:
“Manage your properties like a business, not a hobby. ” – Mark Owens
Theo Hicks: Hello Best Ever listeners, and welcome to the best real estate investing advice ever show. I’m Theo Hicks, and I’ll be hosting the show today. Today we are speaking with Mark Owens. Mark, how are you doing today?
Mark Owens: Good, Theo. Thank you for asking. Thank you very much.
Theo Hicks: Absolutely. Before we begin, a little bit about Mark – he is an active real estate investor and has been full-time for 14 years. He owns over 100 units, has done around 200 wholesales, and he self-manages all of his units… So we’ll definitely be talking about strategies on how to self-manage your properties.
His units range from single-family homes, all the way up to 18-units and everywhere in between. He’s based out of Baltimore, Maryland and you can say hi to him at MarkOwens.com.
Mark, before we get started, can you tell us a little bit more about your background and what you’re focused on now?
Mark Owens: Sure. Thank you for the introduction. I was actually in the IT field when I started buying rentals in 2002. I made a bunch of money in that, and I wanted to invest it, and I wasn’t really sure where. I just knew that the stock market wasn’t a good fit for my personality type. It was more like a casino than anything else… And real estate just seemed like a much safer, controllable investment, where worst comes to worst, I’ve always got the house. I can go live in the house if I have to, and you really can’t say that with the stock market or most other investments.
So that was my life before the rental properties. When I first started buying them, I really had no intention of getting to where I’m at now. The original intention was I wanted to make enough money off some rentals so that in the event that something happened to me and I couldn’t work, that I would have enough money coming in to pay my minimum bills – the mortgage on my home, my utilities, put food on the table… Just like the minimal amount. And once I’d hit that point, I realized that “Man, if I just keep doing what I’m doing, in a few more years I’ll be able to quit this job. I’ll be able to get out of the rat race.” That was even before Kiyosaki and Rich Dad, Poor Dad and all that. I knew I was in the rat race, but I didn’t really know that that’s what it was called at the time; I just knew that I depended on other people to put food on my table, and I didn’t like that feeling. And that is kind of how things got started.
The second part to your question was — let me ask you, what was the second part, Theo?
Theo Hicks: The second part is what are you focused on now?
Mark Owens: Yeah, what am I focused on now… Sorry, I get so caught up with the excitement of talking about the business that it’s easy to lose that stuff. What I’m focused on right now – it’s an interesting thing, because at this stage I’m thinking about downsizing some of my stuff, and I just had an opportunity across my desk yesterday, and it’s something that could significantly add to the number of units that I have, and I can’t really say a whole lot about it right now, because I have agreed to a non-disclosure agreement, so I can’t really give any details about it… But right now I’m just enjoying myself. I’m just keeping the guys that work for me busy full-time, managing my tenants… Right now I’m just happy where I’m at.
I’ve realized recently, and I think most people get caught up in this – that you say “I’ll be happy when this happens. I’ll be happy when that happens.” Well, by the time those things happen, you’re always pushing your happiness into the future, thinking that “Once I accomplish some magical, then I’ll be happy.” I’ve realized that just recently, and I try to put a lot more focus on where I’m at today, and it seems like it’s lifted a big weight off my shoulders. Right now I’m just trying to focus my attention on what I have, and how grateful that I am that I have what I have… And that’s it. I know it’s not really a directly real estate related question, but that’s where I’m at right now with my mindset.
Theo Hicks: I think that’s very wise advice, always pushing your happiness to the future… So you said you were thinking about downsizing… I understand that you’re happy where you’re at right now, and you’re gonna continue to manage your properties, manage your employees, and kind of just enjoy your current situation, but what do you mean by downsizing, and why are you considering downsizing? What does that mean? Are you still gonna have your properties, are you selling the business and moving to the beach?
Mark Owens: The thoughts were — my wife and I, we bought a condominium in the Cayman Islands last year. We’ve got like 3-4 more years and our son will be out of school; my wife works, she’s gonna retire from her job, so we’re thinking in a few years possibly buying another house on the Gulf Coast of Florida… And the plan is to spend four months in Cayman, four months in Florida, and the other four months just kind of bumming around the planet, just seeing what also is out there… And part of that would be to sell maybe two-thirds of my portfolio, own a third free and clear, have a bunch of money in the bank, let somebody else manage the ones that I own free and clear… And it’s really just to get stuff off my plate, to give myself more freedom to do everything that I wanna do. So that’s kind of the goal.
Of course, that’s always subject to change. Any time I make a decision about something, I always give myself the option to change my mind at any point in the future, because the decision that I make today is based on the information I have today. I can get an information tomorrow that doesn’t fit into the goals that I’ve laid out for myself, so I always give myself the flexibility to change my mind about anything, at any time.
Theo Hicks: That is interesting. When you first started out back in 2002, did you have the goal set to do this, to sell a portion of the portfolio, to hold the rest free and clear, and kind of just do whatever you wanna do? Or did you plan on just doing it forever? And to give a little context for my question – some people obviously have the plan to eventually quit their job and then do real estate full time… But then what happens after that? It sounds like you’ve got a plan right now that is gonna come to fruition in a little bit, so I was wondering if you could explain a little bit about the thought process of when to know when it’s the right time to step away from your portfolio and have the freedom to do what you wanna do?
Mark Owens: I think the answer to that question is different for everyone. There’s no right or wrong answer. I met a guy for lunch yesterday that’s a pretty well-known local guy that’s 71 years old. I don’t wanna put too much information out there, because I don’t want people to identify him, but he owns a significant portfolio size, and he has no plans of selling anything any time soon. He’s 71 years old… And I’m significantly younger than that, and I just have a different plan.
As far as how long I’ve had these plans, I guess it’s always been — since I became full-time a few years into the business, I always knew that eventually I wasn’t gonna wanna do this; I wasn’t gonna wanna be 80 years old, taking people to rent court. So I always knew that at some point things were gonna change… And I welcome that change, and the thing that I did that was smart was I ran a really good business that gave me a lot of options.
There are some people that could be 50 years old and they have to keep their properties for another 30 years, because they cash-out-refied, spent all the money, and now they’re upside down. I never made those types of mistakes. I always ran my business smart, I always ran it looking towards the long run, instead of the short-term gratification… And as a result of doing that, 17 years into the business I’m lucky to have a lot of options available to me. And again, as I’ve said before, these things are always subject to change. I could have some deals land in my lap where I just say “Man, I love this business. I don’t wanna go anywhere”, and then I’m gonna be fighting with my wife for five years…
This is one of the things in this business that can drive people crazy – it’s kind of like going to Baskin-Robbins. Sometimes you just want chocolate ice cream, and then you’re going to Baskin-Robbins and they’ve got 32 or 33 flavors and you go crazy; you’re sitting there, trying to figure out which one you want. I kind of like those options.
One of the great things about real estate in my mind is that I can look at any deal or any scenario and I can see 15 different ways to do it. That thing drives some people nuts. Some people just wanna go in, they know how it’s gonna happen, and then they walk away. I like to have options.
And when you have a career like I have, with those options, just about every scenario that I can think of, when I reach a point where I have to make a decision on those options, just about all the time I’m looking for what’s in my best interest for the long-run, not the short-run. If you get caught up with the short-run thing, then you’re always chasing the next shiny object, and it’s really difficult to get ahead. If you think more long-term and you do things that are better for you in the long-run, then in the long-run you’re gonna have a lot more options at the end of the day… I’m approaching the end of the day, and it’s good to have those options.
So again, to answer your question, there’s really no concrete black or white answer, because everyone’s situation and goals and dreams are different. For me, mine worked out well, mostly because of the emphasis I’ve placed on making the best decisions for the long run.
Theo Hicks: Can you go into more specifics on what you mean by this long-term thinking versus short-term thinking? Maybe give some specific examples of things that you should do if you wanted to be thinking long-term, and then things you shouldn’t do, which are more short-term thinking… Because I know you’ve mentioned a few, but could you go through a list of examples?
Mark Owens: Sure. A great example would be if you’ve got a bunch of equity in a property, some people will say “Man, you should refi that out, pull $50,000 out and do whatever you wanna do. Go on vacation, buy the watch and the car, and all that stuff.” My philosophy is if I’m gonna pull $50,000 out in a cash-out refi, I’m gonna take that money and invest it in another cash-producing asset. I’m not gonna take it and spend it on consumer goods. So that’s one thing where I think in the long-run I’ve done very well. I’ve done several cash-out refi’s where I’ve literally walked away with several hundred thousand dollars, but I immediately took that money and bought other properties that made me even more money.
Some of my friends don’t have that type of discipline all the time. It’s very easy to fall into the trap of “I’m gonna go on vacation for a month, and I’m gonna buy the new Tesla”, and all that stuff. I think that that’s one example of something that I’ve done that has enabled me to have the success I’ve had.
Another great example would be my friends are shocked when they find out that I still live in a townhouse. My wife and I bought a townhouse 23-24 years ago. I paid it off 15 years ago. A lot of people think “Man, why do you live in there? You could go buy a $700,000 house.” I could, but then that’s gonna put me in a cashflow crunch some months, because I’ve got this fat mortgage… And the happiness that you get from buying that big house or that expensive car – it doesn’t last. Anytime you go buy a consumer good, whether it’s a house or a car or a watch or a pair of shoes, you get that initial happiness from it, but then in the long-run, a few months later, six months later you’re not any happier than you were before you ever bought that thing.
So one of the things that I’ve done that’s enabled me to have this kind of success is by being able to ignore that need for immediate gratification where you say “Man, I want it now, I want it now”, and I’ve been able to look at that and say that that’s my enemy right there. That is my long-term enemy, having to have it right now.
So that’s a discipline issue. A lot of people don’t have it. But if you sit down and you look at the numbers and you look at what’s in your long-term best interest and you make decisions, whether it’s a cash-out refi, or buying the big house, or buying the expensive car, if you look to see what’s in your best interest in the long-run, then you’ll probably make similar decisions to what I’ve made, that are gonna give you a much better chance of having long-term success and financial independence.
Theo Hicks: Another piece of very wise advice. Alright, so the money question, which is what is your best real estate investing advice ever – but I did wanna ask you about self-managing, so maybe you can answer the question “What is your best real estate investing advice ever for self-managing your own properties?”
Mark Owens: Oh, man… That’s a loaded question there, because I could answer both questions with some good information. My best real estate investing advice for managing your own properties would be to manage your properties like a business, not a hobby. This your livelihood, this is how you make a living, and sometimes that means making tough decisions. That means taking people rent court that you don’t wanna take to rent court, it might mean selling a house that you like, but it’s not in your financial best interest to keep it… So that would probably be it. But there’s a lot more to it than that.
One of the things as far as self-managing that has made it really easy for me is that everybody that knows me trusts me 100%. If I’m in the Cayman Islands on vacation and I have a furnace that breaks in the middle of the winter, and my HVAC guy goes over there and he knows that “Man, I’ve gotta replace this furnace. It’s gonna cost $2,500”, and he knows I’m not gonna be back in town for two weeks, he won’t hesitate to replace that furnace on his dime, knowing that I’m gonna pay him; the day I get back he’s gonna get a check in the mail.
So building these relationships with your contractors, with your tenants, with everybody in the business, where they know if you’re not in town, the day you get back they’re gonna get paid – that’s one of the things that has really made it easy for me… Because I do like to travel a lot… So having those relationships gives me the peace of mind knowing that if the crap hits the fan when I’m not around, I have a lot of people who are gonna have my back, because they know I’m gonna have their back as soon as I get home.
So there’s a lot of different pieces of advice I can give as far as the best advice ever for self-management… Those are a couple of them that I’d like to touch on.
Theo Hicks: Okay, Mark, are you ready for the Best Ever Lightning Round?
Mark Owens: Man, bring it on!
Theo Hicks: Alrighty. First, a quick word from our Best Ever sponsor.
Theo Hicks: Alright, Mark, what is the best ever book you’ve recently read?
Mark Owens: The best ever book I’ve recently read… It would have to be Rocket Fuel.
Theo Hicks: If your business were to collapse today, what would you do next?
Mark Owens: [laughs] [unintelligible [00:15:35].18]
Theo Hicks: What deal did you lose the most money on?
Mark Owens: This is gonna be hard for people to believe, but it is true. I have only lost money on one deal; I lost $5,000. It was a 15-unit building. 13 apartments, 3 commercial spaces. I partnered up with someone that had no idea what they were doing. They wouldn’t let me buy them out of the deal, and after 9-10 months I told the guy I wanted to auction it. I auctioned the property, absolute auction. We ended up losing $10,000 on it. I lost 5k, he lost 5k. I walked away happy, and he walked away pissed, but… He only saw the building twice; I was doing all the work, and he wasn’t doing anything. I was getting tired of it. So that’s the only real estate deal that I’ve ever done that I lost money on.
Theo Hicks: What types of things did you implement in your business to make sure that never happened again?
Mark Owens: Great partnerships.
Theo Hicks: Simple. So let’s go on the other side of the coin – what is the best ever deal you’ve done?
Mark Owens: The best ever deal I ever did was I bought a ten-unit vacant building. It was a listed property. I was gonna keep it as a rental… I renovated the property, and this was at the top of the market, around 2007… And I decided that the property was too far from my house, and I just got this gut feeling of like “You know what – I don’t want this property.” I really couldn’t put it into words, but it was just my gut talking to me.
I listened to my gut, I sold the property to a DC investor that was doing a 1031 exchange. I made 195k on it, and I delivered the property vacant. That 195k paid off my house, paid off my car, paid off my credit card… I saved 50k and went on vacation. That was probably the best deal I’ve done.
Theo Hicks: What’s the best ever way you like to give back?
Mark Owens: Helping other people.
Theo Hicks: And then lastly, what’s the best ever place to reach you?
Mark Owens: Probably my website, because if people go there, then they can find me on Facebook, they can get my email address, all that stuff. It’s kind of like a one-stop-shop. There’s not a lot of information on there, but I think there’s buttons — I’ve got a coaching page… Mark Owens REI on Facebook. I’m easy to find; I’m on Bigger Pockets, LinkedIn, all the other stuff. My website is probably the easiest way to find me.
Theo Hicks: Perfect. Alright, Mark. I really enjoyed the conversation, lots of wise advice. The two big takeaways for me was when you talked about you’re happy where you’re at now, because you see a lot of people always pushing their happiness in the future and saying “Once I do this, I’ll be happy.”And then when they do that–
Mark Owens: Yeah, I’ve been guilty of that myself.
Theo Hicks: We all are, but just knowing that definitely helps us get over that a lot faster. And then the second thing that I really liked was when you talked about immediate gratification being your biggest enemy… And the reason why – you’re at the point where you could potentially sell a large portion of your portfolio, own the rest free and clear, and then use some money that you have saved up, the cashflow from those properties, and have the freedom to do whatever you want – it’s just because you’ve defeated that enemy more that it’s defeated you throughout your business career.
You gave some specific examples of things you can do to have long-term thinking for your business, versus short-term thinking. The two examples are if you have equity in your property and you decide to pull it out, don’t spend it on personal things like vacations or cars. Instead, invest that into another cash-flowing asset.
The other example was that you live in a townhouse that you bought 20+ years ago, paid off quickly… Sure, you could buy a massive, million-dollar house, but again, going back to that immediate gratification and realizing that happiness is typically not going to last when you’re buying a consumer good.
And then lastly, you gave your best ever advice on self-managing, which is 1) make sure you’re managing your properties like a business and not a hobby, which requires making tough decisions, taking people to rent court, selling a house that you like that’s not cash-flowing… And then also number two was to focus on relationships. In your business everyone trusts you 100%, so if something were to go wrong at your property, for example, the contractor won’t wait for you to get back from vacation to fix a really big leak because they don’t know if you’re gonna pay them or not. Instead, they’ll go ahead and take care of that issue, knowing that once you get back, you will pay them in full.
Again, I really appreciate the conversation. If you guys wanna say hello to Mark, his website again is MarkOwens.com. Have a best ever day, and we’ll talk to you tomorrow.
Mark Owens: Thanks, Theo!