From W2 Employee to Full-Time Investor: Zero Down Deals, Multifamily Scaling & Creative Finance Secret

Mike Doherty (00:00)
So I owed— I owe taxes for twenty twenty-five, paid— I have to pay him in twenty twenty-six. And after meeting with my accountant, he’s like, “If you take $70,000 and invest in your SEP IRA—” I’m a full— when I file, I’m a full-time professional real estate status because I can prove over seven hundred and I think eighty hours it is. It’s all I do is real estate. All I do. You know, it’s very easy to prove, which helps a lot of people out because you can carry over. I mean, normally when you’re not, as you may know, like if you’re a W-2 or 1099 and not real estate, and you can only have up to I think twenty-five thousand dollars in losses, in real estate losses in one calendar year. When you’re professional in real estate status, you can— there’s no limit. So it’s really powerful. So he’s like, “Mike, let’s invest $70,000 into—” and I’m gonna make this up. I don’t know exactly what investment vehicle it is, but like your SEP IRA, and it’s gonna lower your taxable liability by $70,000. I’m like, “Great. Where do I get the $70,000 to do that? Like, I’m not just flowing with money here. right.”

Quentin (02:33)
Hello everyone, welcome to the Real Estate Pros Podcast. I’m your host, Q Edmonds, and I’m excited to be here today. I have a fantastic guest. This gentleman is a full-time investor, he’s an agent, he does brokerage work, he personally invests in multi-family and residential, and so I’m so excited for us to peek through his lens, get to pick his brain, his experience, get to soak up some of his knowledge, and so I am so excited to introduce you all to Mr. Mike Doherty. Mr. Mike, how you doing today, sir?

Mike Doherty (03:06)
Q, thank you so much. Appreciate the— the kind words in the intro.

Quentin (03:10)
Absolutely, my friend. You— ain’t gonna lie on you. Everything I said is true. You’re the man, you know? And listen, Mike, I can’t do this episode without you. So I’m— I’m glad that you’re here. Right. Like I can’t do it without you, man. So I’m glad that you’re here, sir. And listen, Mike, I’m gonna type— I like to dive right in. So man, if you don’t mind, I want you to tell us like what’s your main focus these days and give us a little bit of an origin story, kind of how you got into the space that you’re in. So talk to us a little bit, Mike.

Mike Doherty (03:39)
Yeah, so I started— so I got in twenty fifteen, I graduated from the University of Connecticut, Go Huskies, and I actually got a job. I went to school for consumer behavior, which is really just a study of why people want to buy things. So a lot of psychology and a lot of marketing, and I loved it. But I ended up getting a job in finance, complete three sixty, and I ended up selling mutual funds to financial advisors. I was an internal wholesaler. And it was a really good gig out of college. I stayed up in the— like the Hartford area. I was doing, you know, the corporate gig, nine to five, two cube— you know, in my cubicle, two monitors. And, you know, a year or two in I realized like, “Man, I can’t— I don’t wanna save my way to retirement. I can’t— I don’t do this forever. So there’s gotta be a better way.” Found BiggerPockets and, you know, podcasts like this one and I just started consuming knowledge about real estate. I didn’t know anything, but I loved real estate. So I made it a mission to get my realtor license in twenty nineteen and build up a small book of a business, maybe not to supplement my total income, but you know, just— just help towards the bills and that way there I can feel comfortable quitting that job. So in about twenty seventeen, after learning everything I got, or you know, after learning everything, I ended up buying a duplex in New Britain, Connecticut, in n— not such a great area, using an FHA loan, three and a half percent down. Lived in one unit, rented the top floor to a colleague, got that corporate job at the time. And now I’m— you know, I’m coming out of pocket, maybe three, four hundred dollars a month difference between what my principal interest taxes and insurance is every month and what he’s paying me in rent. So now I’m really saving all my W-2 income and I’m living for almost free. You know? So you know, all my buddies at the time were like, “Dude, you’re gonna move out— move out of the house here, we’re having a great time, to New Britain? Like, are you kidding me?” I’m like, “I gotta do it, guys. I gotta do it.” So—

Quentin (06:08)
Mm.

Mike Doherty (06:18)
I did that. My wife then moved in with me— my now wife then moved in with me, and she ended up buying a three-family in New Britain a couple of years later. Same process, three and a half percent down. Moved into her unit, now I rented out my unit, all while working at this corporate job. So I’m consuming knowledge. I bought my first duplex, we moved into her three-family, now I’m living for free in her du— in her three-family, I’m making cash flow in my duplex, and I’m like, “Okay, cool. We’re starting.” Still making money at that W-2 job, still hate it. It’s okay. We’re grinding it out. Ended up buying a second property in Manchester, Connecticut, a duplex, but I had to use 20% down, right? Conventional loan. It’s a non-owner occupant investment loan. I’m not living in it. And so I— I’ve saved up 20%, put it down, and now I’m out of money. I’m like, “How do people— you know, how do people get to hundreds— hundreds of units? I don’t get it. Are they like super, super wealthy?” I’m like, it would take forever for me to save up another 20% to buy another loan. So again, consuming knowledge, listening to podcasts, reading books, and I learned about the BRRRR model, right? The buy, renovate, rent, rehab, refinance, repeat. And so I learned everything I could about that, and I ended up buying my third investment property, a foreclosure in Middletown, Connecticut, another two-family, and I bought it for like a buck twenty off from the bank. I invested like 60 into it, so call it all in 180. It appraised at like three, maybe 350 at the time, and I did a full cash out refinance, tax-free money, and I recouped almost all of my down payment. And now I’m able to recycle that original down payment. And from there it was like off to the races. Like, “Okay, like—” it was like that aha moment. I’m like, “That’s how you do it.” And if you can do it on a two-family, you can do it on a four-family. And if you can do it on a four, you can do it on a twenty-unit, a thousand-unit, the same process. It just— it just catapults. And so from there— so at this point I have, you know, two, four, six doors, living for free in that three-family still, got my realtor’s license, ended up— COVID ended up happening and I got— we all had to work from home. And as much as like a terrible time that was for everybody, I was able to really grow my book of business because I could take calls for clients and go on inspections and go on appraisals and really like put my foot forward on it. And so I really built up a good book of business, wasn’t the best W-2 employee, I’ll be honest. Writing was on the wall, and I quit that job in 2021 and went full time into both real estate investing and become— and being an agent for others. Since then, fast forward to now, I have a couple of agents that work under me. I do have an awesome, you know, transaction coordinator assistant. She helps me with a bunch of stuff. I’m always looking to grow and bring on new agents. now with eXp Realty, it’s a great brokerage. So I’d love to talk to anyone that’s listening if they’re thinking about making a switch. Great, great stuff to have, you know, be said about that. And continued investing. I have a couple different partners on deals. I’m a big fan of like partnering with someone that can add value to something else. So either if I’m finding the deal, I want to partner with someone that can bring the money. If I’m bringing the money, I want to partner someone that found the deal. And so today my portfolio is probably like 60, 70 units, a combination of mainly multifamily. I do have a commercial office building that I kind of lease back to myself. So we have a— it’s like a 10,000— and I bought this with a partner. We did a 1031 exchange into it. We bought it probably four years ago for like 1.5. It’s probably worth two now after— if I had to put it on the market. So we have some good equity there.

Quentin (09:36)
Huh.

Mike Doherty (09:50)
And we needed an office, right? And so we’re like, “Okay, let’s buy an office building. We’ll— we’ll put ourselves on a lease and we’ll have the tenants pay down the rest of the mortgage.” And so it’s an expense for my Mike Doherty realtor business, but it’s income for the business for the LLC we own the building. And so got that. have a like a triple-net lease office building, a doctor’s office. done everything from 1031 exchanges. I did my first couple cost segs last year. That was huge, huge, huge for tax savings. So I can speak about that. So we can go wherever you want, but yeah, it’s been a great journey.

Quentin (10:57)
Man, sir. Thank you, man. Thank you for taking us through the journey. thank you for— man, telling us kind of just where you are, how you got there. I’m gonna peek into a little bit about you just for— just for a little bit. Cause I’m— I often say destiny has no wasted moments, right? Meaning like we are building momentum to the people that we are today. And obviously, man, I’m listening to you, you had to pivot through COVID. you made the wise decision, like the writing was on the wall when it came to the W-2. So as you went through this journey, what are some of the things that you learned about yourself? Have— has it— have you learned like discipline, resilience? Have you learned to— has it changed your— your— your view on innovation? Like what are some of the things you’ve learned about you, man?

Mike Doherty (11:38)
Yeah, I would probably say that there’s no— no free lunch and knowledge is power, although I never want to be the smartest person in the room because if you are, then you’re not learning. Always want to be learning, be very malleable, be coachable. But no one’s gonna give it to you. You know, I see a lot of times, you know, people posting like, “I wanna be a part of this deal, I wanna do this,” but like what have you done to better yourself, to put you in the position to make, you know— or people always—

Quentin (11:42)
Yeah.

Mike Doherty (12:06)
wanna raise capital, like want to borrow money from people. And I— I’m all about using other people’s money. But like what have you done to prove that you can borrow other people’s money? And people ask me for referrals from my private lenders, and I’m like, “I’m— with all due respect, I’m not going to give it up because you have no track record. Like what have you done to prove that you are worthy to go buy these properties?” And I’m not saying that like no one— everyone— everyone can do it, but you got to start somewhere and you got to like—

Quentin (12:23)
Yeah.

Mike Doherty (12:34)
put in the effort. Like no one— I didn’t come from money. No one handed me a book of how to do this. Like I went on and I figured it out. And I still don’t have it all figured out, but that’s why I always want to be learning. and so like I’d say knowledge is power. The— just the more knowledgeable you are, the more resources you’re gonna tap into, the more deals you can make happen, and never be the smartest person in the room, and just— and just keep pushing. Like I had a— I had a tree fall in a tenant’s car the other day. Like things are always going to happen and everyone is okay, thank God. But like you just deal with it as it comes and you— you build systems and you build— have good systems and good teams and you know you could scale.

Quentin (13:11)
Yeah. Yeah. No, thank you for that, man. Thank you for that reflective answer. Because as you said it, you know, things happen within business, right? And so one of the constant in everybody’s business is the business owner, is themselves, right? And so how— you know, being grounded, knowing how to— to pull from your— your past failures or even your past success, sometimes to kind of clear the visions a little bit for you to know where to go forward and keep yourself motivated. You know what I mean? And so, yeah, so I appreciate your answer, man. Let me ask you this, sir. What’s the next real goal? Like, what are you looking to solve or scale next? What’s next for you, man?

Mike Doherty (13:46)
Good question. Where do I start? So I truly believe like AI, ChatGPT, Claude is gonna— like can make all of our lives a lot easier on the business side. I dabble in chat now, but I really wanna focus. Like my biggest thing is like I’m definitely— I need an integrator in my life. I have all of these great— I’m like a visionary, right? There’s a great book. I’ll reference it later, but—

Quentin (14:07)
Mm.

Mike Doherty (14:13)
I am like a visionary and I have all these great ideas and I need an integrator to help me execute these ideas. And one of them is bringing Claude or chat into my real estate agent business. I ha— I don’t know the angle I want to take from the investment side yet, but from building a brokerage business, which honestly funds my real estate investments, right? I— I take all my commissions and I just go buy more real estate with it. I— I wish I was going out and buying sweet cars, but maybe one day I will. Yeah.

Quentin (14:35)
Yeah. Yeah. One day. Yeah, I gotta say— one day, yeah, yeah. There you go. There you go. Yeah.

Mike Doherty (14:41)
Yeah, one day. I have a couple of toys, but you know, I’d love to have a whole garage. but integrating that and— and finding the right— finding the right executive assistant to help organize my life, like I think is the next— the next goal for me and really diving more into the— this AI stuff. I— I think it’s gonna be a game changer. So—

Quentin (15:01)
I love it, man. Always like to get people’s perspective on the word relationship, right? And so relationship within business. So I would love to know your philosophy on relationships, how it serves you, and like who are some of the people in your network that— that you work closely with? Maybe people who refer a business to you or you refer a business to them. Like so tell me about the relationship, tell me about the word relationship in general, and then expand a little bit more on the relationships that you have within your network.

Mike Doherty (16:10)
Yeah, no, I’m a big relationships guy. I— I find them very valuable and not all relationships work out. You know, it’s if you’re the one always giving, giving, giving, then it’s— it’s a one-way street and it’s like, “Why— why— why— why are we doing this?” You know, and I f— you— you figure out who in your database and in your network is like that. You know, I— I get all the— I get multiple calls a day, right? On the brokerage side of things. I get people calling, “Mike, what do you got for deals? What do you got for deals? Anything off-market? What is it?” I’m like, “Thank you. Like if I have something, I will surely send it to you.” But I— what I feel like saying, which I haven’t, is any good deal I have is going to the top five best clients that use me to list their property. Who did you use to list your last property? Right? You’ve got to pay to play. Like, if you’re— if you expect me to give you my entire database of gene— like the best deals possible, why would I do that versus someone who has used me on both the buying and selling side? Like they’re a trusted client. I’m going to go to them first. So I see this all the time. And it’s not being selfish or discriminatory or anything. It’s like, I’m going to help the people who are helping me. And like I— they see the value I bring to them, so I’m going to try to do my darnest to bring the most value to them. And there’s a couple people that are like, I’m their go-to guy. Like knock on wood, I haven’t failed them yet. And we’ve probably done over a hundred transactions together. And so like he’s getting every single deal I got. Like he is the first— like he’s the first person I’m thinking of. And so I tell these people, I’m like, “Think about that.” And I’m not saying I have to be your— you’re like your— your number one realtor, but just think about like what have you done for me. Like it takes two to tango, and I’m a pretty easygoing guy. Like you don’t need to whine and dine me, but like you know, maybe a referral to s— to someone that you thought, “Mike might be able to help him out.” You know, and so huge relationship guy. I’ve used the same like accountant forever, I’ve used the same attorney forever, and the biggest thing is they— they pick up my call. It’s that simple. They just pick up my call, they make the deals go simple, you know, I pay whatever fee they want. I don’t even think twice and it’s like, “If you make my life easy, then you have my business.”

Quentin (18:21)
Sir. Yes, sir. No, I l— I love it, man. Listen, you are a multifaceted guy. I mean, of course, you know, you— you said at the top, it’s so many different angles, different ways we can go at and talk about things. I want to just kind of open up the floor to you to maybe if there’s some other word of inspiration, education, or motivation, or even like strategic, operational, right? But maybe you came in with like a message or a thought in your mind that you wanted to make sure people kind of known or knew. I kinda wanna open up the floor so you can land that message that maybe, you know, it would inspire them, motivate them, or that would really help them out. I just kinda wanna open up the floor for that, man.

Mike Doherty (18:58)
I would probably say it’s never too late to start in real estate. And the— what I love about real estate is there’s so many different facets, right? You can be a real estate investor and own your own property. You could be a passive guy in an LP deal and a much bigger deal you never even see, and you’re gonna make your— you know your passive returns, your you know dividends almost. And you could do industrial, you could do self-storage, you could do RV park, you could do multifamily, you could do office building, you could do medical buildings. Like the list goes on. There’s so many different ways to skin a cat, we’ll say, in real estate, and there’s so many. What I’ve come to find out now, at least in Connecticut, is that you know, let’s say you have like the number of units is irrelevant, honestly. Like people say, “I have a couple hundred units.” Like, great, like what’s your cash flow like? Like, are you actually profitable? You know? And out of like the 60 units I own, let’s say, like I’d probably say at best maybe they break even. I probably lose on a lot of them, but they’re such great tax— tax vehicles, like a tax savings vehicles and different ways to— to like once you figure out how to play the game, it’s— it’s pretty— it’s pretty powerful stuff. I’ll give you an example, right? And this is not financial advice. I am not an accountant, I’m not an attorney, I’m not a financial advisor, so let’s put that disclaimer out there. All right. So I owed— I owe taxes for twenty twenty-five, paid— I have to pay him in twenty twenty-six. And after meeting with my accountant, he’s like, “If you take $70,000 and invest in your SEP IRA—” I’m a full— when I file, I’m a full-time professional real estate status because I can prove over seven hundred and I think eighty hours it is. It’s all I do is real estate. All I do. You know, it’s very easy to prove, which helps a lot of people out because you can carry over. I mean, normally when you’re not, as you may know, like if you’re a W-2 or 1099 and not real estate, and you can only have up to I think twenty-five thousand dollars in losses, in real estate losses in one calendar year. When you’re professional in real estate status, you can— there’s no limit. So it’s really powerful. So he’s like, “Mike, let’s invest $70,000 into—” and I’m gonna make this up. I don’t know exactly what investment vehicle it is, but like your SEP IRA, and it’s gonna lower your taxable liability by $70,000. I’m like, “Great. Where do I get the $70,000 to do that? Like, I’m not just flowing with money here.” All investors are always cash poor. So I was like, “Wait, wait, wait. I have a two-family in Middletown, that third property I bought, that from foreclosure, I still own it, bought it back in— I don’t know, 2018, 2019. It’s appreciated, and it’s worth $375. I owe buck fifty, maybe. Why don’t I do a cash out refinance and pull out a— do a seventy five percent loan to value, cash out refi, tax-free money, and take a hundred and thirty tax-free money, put seventy away towards the retirement, which is going towards my own savings anyways. I don’t have to dip out of my pocket. Yes, I reset the— you know, I have a new thirty-year amortization and a little bit higher mortgage payment, but the rates are around the same as when I bought it, six point six, and I just got quoted six point seven five with no points.” I’m like, “Huh.” Like that aha moment, like, “That makes sense.” If I didn’t have that duplex, even though it doesn’t cash flow or maybe clips a couple hundred bucks a month, that— I just— I just tapped into seventy thousand dollars of tax-free money to then go save taxes over here in twenty twenty-five and go invest in my own SEP IRA. No-brainer. Come on. So like that’s— that’s the power of real estate, you know? It’s like— that’s like when you— when you start thinking like that, it’s like, “Okay, cool, like this isn’t so bad, you know, that, you know, I can deal with some bullshit to do—” you know, yeah. So—

Quentin (22:46)
Mike, man, sir. Man, I appreciate you. This was good for me. Sure is gonna be good for our audience. Just again, learning from your experience, man. So thank you for putting in the time, sir. Hey man, listen, if someone wanted to reach out to you, connect with you, collaborate with you, learn more about what you’re doing, sir, how can they get in contact with you?

Mike Doherty (23:03)
Yeah, no, I appreciate it. So I also host a podcast, Sky’s the Limit Podcast with Mike and Ryan, right? It’s on YouTube, Spotify, Apple. I think we’re approaching maybe 80, 90 episodes now. So it’s been pretty good. Just speak to, you know, guys like yourself about real— we just talk shop, talk real estate, pretty casual. 30-minute episodes of Sky’s the Limit Real Estate Investing Podcast. My email is [email protected]. I’m sure we can link everything in the show notes. I’m always free for a call. I do all brokerage sales in Connecticut. That’s where I’m licensed. So if any listeners are looking to invest in multifamily commercial assets here in Connecticut, happy to help them out. Facebook, Mike Doherty, Michael Doherty. So yeah, I’m around. You can find me.

Quentin (23:34)
Yeah. Absolutely. Well listen, my friend, let me say three things to you first. Sir, one, thank you for your time. Time is my— our most precious commodity. So thank you for your time. Thank you for your story, showing up as your authentic self, planting seeds that’s literally gonna change people’s lives. And lastly, man, thank you for your mindset and bringing that mindset to this platform. Mike, I greatly appreciate you coming on today, man.

Mike Doherty (24:11)
Q, thank you so much. Really appreciate it.

Quentin (24:13)
Absolutely. Well listen, y’all heard the professional. His information is in the show notes. That’s how I can tell he’s professional, right? So the information is there. It’s in the show notes. Please get in contact with Mike. But definitely make sure you are subscribed here. Because I promise you, we’re going to continue to bring up amazing people just like Mike. So sir, I say thank you again. And everyone else, listen, y’all have a fantastic day.