How to Build a Stable Rental Property Portfolio | Ittai Shiu

Ittai Shiu (00:00)
waiting for that full clarity, you know, I mean, often means missing the opportunity. So especially when it comes to

financial decision, you know, I mean, the the the perfect timing or the per perfect conditions, they’re never gonna be there, you know, like I’m all for due diligence and mark analysis and and and being good at underwriting, but analysis paralysis can cause you to never never leave the gate. You’re never gonna be fully ready, you know. So you know and then also so many of those true lessons, you know, come by simply doing.

Michelle Kesil (02:10)
Hey everybody, welcome to the Real Estate Pros Podcast. I’m your host, Michelle Kesil. Today I’m joined by someone I’m looking forward to chatting with, Ittai Shiu who is a real estate investor. His brand name is The Unintentional Investor, and he is both in single family and multifamily, primarily in the Bay Area. So excited to have you here today, Ittai.

Ittai Shiu (02:34)
Hi, Michelle. Thanks for having me. Excited to be here.

Michelle Kesil (02:36)
Great, let’s dive in. First off, for those new to your work, can you share what your main focus is?

Ittai Shiu (02:43)
So currently I’m experimenting with I’ve just started becoming more interested in out-of-state investing. The past five years, I’ve moved from my prime primary market, which is the San Francisco Bay Area, to the Midwest. I have single-family and multifamily in the Minneapolis-St. Paul area.

where where I’ve got some family and roots and and and some some positive influence to kind of help me like weigh the the the pros and cons of different markets and neighborhoods within that area. And I’ve also expanded into Columbus Ohio where I have no friends and family where I I I was introduced to the market from a a colleague who is is an out of state investor who does know the market very well introduced me to

an amazing team of agents and brokers and property managers and lenders. and from that point of view, they’ve really helped me understand what are some great opportunities in Columbus and Ohio. so I own three multifamily properties there now. so I’ve got three primary markets that I keep my eye on.

Minneapolis, Minnesota, Columbus, Ohio, and the San Francisco Bay area, and that keeps me pretty busy.

Michelle Kesil (04:09)
Absolutely. And how did you get started with investing?

Ittai Shiu (04:13)
so it was actually unintentional. it actually for my my my my parents were both very much into real estate real estate investing early, early on. I mean, you know, both immigrants, both moving from Asia to the San Francisco Bay Area back in the 70s. and they knew the ticket to generational wealth was real estate.

They both had very different strategies and views on how to approach real estate investing. They eventually divorced and went their own separate ways. But you know, during that time, I got a front row seat into what it meant to to to hustle and be and really force appreciation and value out of out of real estate investment.

The the good news is I was able to to understand early on how valuable this was. The bad news is I I really did enjoy it. I saw how much stress it caused, you know. I mean, what it meant when you had a bad tenant, what it meant when you had a pipe leak or burst, you know, what it meant when you purchased in a neighborhood that wasn’t that that was really unsavory. And at an early age, I just decided.

Yeah, I don’t want any part of this. So my first taste, my first decision in in investing was I don’t wanna. you know, I mean fast forward a couple years, went to college, you know, kind of moved back to the Bay Area, moved into my dad’s basement and realizing, yeah, I don’t want to pay rent. I also don’t want to stay dad’s basement for the rest of my life. So went and purchased purchased a condo. here in Oakland, California, I still own it.

and from there it started to kind of dawn on me, like, okay, actually, because I’m not paying rent, I’m actually building equity. And that kind of gave me a little bit of a a rush, you know, like, okay, I’m finally grown up here. from there I met my my my girlfriend, my now wife, and we ended up kind of this on this journey of, well, when we upgrade to the next place, a bigger condo, you know.

We keep the first thing that we purchased, rent it out, you know, and then by the time we were in our our our second house, we had two condos and one cute little cottage that we were renting out. so unintentionally, I was I was a real estate investor with with property management duties and and and everything. and that included those busted pipes and those questionable tenants sometimes if I was smart about it.

but that also came with it, you know, this this opportunity, this flexibility and this in in in our lifestyle and this opportunity to create generational wealth for our kids that were just about to be born when we moved into the the second house that we purchased. and from from there it’s just kind of been it’s this this story of of as life progresses, you know, what happens to your real estate.

portfolio and how does that how does it support your life, you know, how does it support your family and how does that continue to continue to build general generational wealth?

Michelle Kesil (08:25)
Yeah, that’s amazing that you were able to use trial and error to get to where you are now.

Ittai Shiu (08:31)
very much so. you know, I mean I was very much a a fail forward type of guy. so and and you know, anytime anyone asks for advice from me, whether they’re a student or somebody else who wants to get into real estate, it’s like you’ve got so many resources out there, you’ve got so much experience, you’ve got you know.

a host like you, Michelle, podcasts like like investor fuel, but all of these resources out there that that help to mitigate the risk of of making a bad decision. but you’re not gonna not fail. So what I do say is like hey, when you get out there, you know, make your decisions and for God’s sake, make unique mistakes. You know, I mean learn from from all of the resources out there but

Do your best to make an educated judgment and a decision. But know that that you’re not going to avoid some of the errors and mistakes. In fact, those are gonna be the greatest accelerator to your to your education on this on this journey. But at least try to make unique mistakes.

Michelle Kesil (09:44)
Sure. What do you feel have been some of the main keys that have allowed your business to grow and run successfully?

Ittai Shiu (10:27)
what really helped us to scale our portfolio was was the fact that obviously starting starting early, real estate investing rewards folks who who think about it long term. I mean, it’s not a get rich quick, you know, situation. so by the time our first son was born.

our first child, we have a a a a boy and a girl. so he was born and we had had a single family home and two condos that we were renting out. there was a stretch of time, I’d say about 10 years, where we didn’t make any any moves, we didn’t make any acquisitions, we we didn’t have the mind share. We had, you know, actually very, very soon we had two kids. both my wife and and mine’s careers were actually doing very well.

and we didn’t have have the bandwidth or the mind space to to think about expanding our portfolio. Instead, what we did is we we paid our debt down, that increased the profitability of the assets that we did have, that really, really turbocharged how much equity that we had to tap into when it came time for us to make another move. and

What happened probably around, you know what, it was right before COVID, where where my my my position, my long-standing position of 20 plus years in in advertising technology was eliminated, and I and we were in the middle of COVID. I had the opportunity to do some consulting, to go back to a nine to five W-2 job, you know, or or try something else.

And the the opportunity that I had during COVID to just kind of be home with the kids and see them grow and get involved with their their their activities and and and drive them, it was really something I didn’t want to give up. And the flexibility of going, you know, I mean my daughter’s got a cold. I gotta take her to the doctor tomorrow and not have to

go through the hoops of taking time off or or or all of those things that come with the W2 position, I I thought to myself, I really don’t want I I don’t want to give that up, you know. At the same time, real estate’s always been there for us. And I feel like like I can I can kind of have it all. I can have I I can leverage the skills that I have, that I’ve that I’ve gained through my portfolio and

What we’ve done to date with our real estate portfolio, you know, as well, maintain that level of flexibility that will you know that will allow me to be more involved with my family. so from there we decided my wife was going to continue her W-2 job. I really started to understand, wow, okay, if I put all of this time into our our real estate portfolio, I could really offset her her her our our tax our tax exposure.

and there really is a huge benefit to me not having a W-2 job, you know, perhaps doing the side consulting. And actually, what I ended up doing later was I started teaching part-time at the local university, which was great, which which actually gave me access to a teacher’s HELOC, which gave me a really favorable rate. and and and all of this afforded us a lot of flexibility and and

purchasing power to expand our real estate portfolio. And that’s when I started to think, okay, well, it’s San Francisco Bay Area, it’s actually very pricey. I know the market enough and I don’t feel confident purchasing at this time. So I started to look out of state. And that’s when I started doing analysis in in other markets and built my built out our portfolio in in Minnesota and and Ohio.

Michelle Kesil (14:44)
That’s great. And so what has been the biggest obstacle that you feel you’ve overcome in your investing journey?

Ittai Shiu (15:32)
yeah, definitely the the analysis paralysis. I’m I’m thankful that we have access to all of the data that we have. and you know, when I think about how my parents would analyze a deal, I I it it it it feels like the Stone Age. They had no internet, they couldn’t they couldn’t look things up, you know. I mean here I can

you know drill down do scre you know go down to you know records online I could I could do a street view on Google and do so much you know so much due diligence, you know, I mean without having to leave leave my desk, get on my pajama pants, you know, and you know I mean and I think that’s been great. There’s the double edged sword though.

Where it’s so much data that you could spend, you know, you could spend the entire time, you can sp you can spend, you know, days and weeks analyzing a same deal. And there are these opp there’s plenty of opportunities there where timing is of the essence, you know. I think it was Steve Jobs, Steve Jobs had a had a philosophy where he could make a decision. He was comfortable making a decision with 70% the 70% of the information.

70% of the data, because you can you can’t ever have 100% of the data. If you have 100% of the data, the event’s passed already, you know. so I I really try and hone in on that philosophy to go look at do I have enough information so that I can make a highly educated decision and and ex and incur an acceptable level of risk to make a decision.

And I will say that served me, that served me pretty well for the for for the for all of the acquisitions that I’ve made in the past five years. you know, I mean all but one have been, I would say, a home run. And for that one, it’s just taking longer than I expected to work through permits and contractors to get that live and stable.

Michelle Kesil (17:42)
What are you most focused on solving or scaling to next?

Ittai Shiu (17:48)
I would say

It’s not necessarily scaling that I’m aiming to. I I really want to focus on stability, to be able to project at what point will my portfolio be stable enough for me to to count on. you know another another milestone is is, you know, while I don’t have a full-time W two job, at what point are

are we okay as a family where my wife no longer needs to hold a W-2 job? And that the answer is not necessarily, well, let’s let’s buy 10 more duplexes, you know. I mean, well, acquisition is definitely a part of it. the combination of optimizing what we have, you know, in strategic deals, you know, I mean investments,

in a in a variety of strategies and it could be syndications, it could be flips, you know, I mean, it could be turning more units from long-term to midterm rentals. that’s what I’m really aiming for is not for stability across individual units, you know, individual properties, but stability across the entire portfolio.

so that we can count on it like like a business. It’s a single single bottom line that we go, okay, you know, our our real estate business did well this year. Or here here are some here are some areas that we can optimize to improve our ROI, you know, and really justify, you know, this further investment. that level of stability is what I’m really aiming for.

Michelle Kesil (19:33)
What is the biggest piece of advice you would give to an investor?

Ittai Shiu (19:39)
So one piece is definitely that that thought on stability, in that stability is is not something that you find or that you walk into. I mean, there’s everyone should, you know, wants or or you know, is striving for a stable rental portfolio.

and you know, mean there’s there’s great there great deals out there where you’re just you just walk right into equity or the price point was so great that you can absorb you know any risk of a delay or a bad tenant, you know, but you’re still walking into a situation that requires work, repairs, upgrades, management dealing with existing talent tenants. so

So stability is it’s it’s built. It’s not it’s not found. so if you’re investing in you know repairs, that’s one thing, but really the most important thing is, you know, are your your your tenants? They’re they’re your lifeline. You know, tenants aren’t just rent treks, they’re they’re trusting you with their their home and they deserve this level of like of of respect. This is it’s it’s a mutually beneficial relationship in this relationship. So

you know an investor is a a a landlord and and by being proactive and responsive and fair, you know, I mean, you create kind of that long-term stability, you know, the kind, you know, and and develop that that relationship with a tenant that investors want. and I think that is, you know, that is that is key in long term or in the optimization of your portfolio, but long term you know, still bit stability around your portfolio.

you know, another thought actually is is what I did alluded to earlier, which is that analysis paraplasis, something that I this is advice that I I I I myself need to take in that you know, waiting for that full clarity, you know, I mean, often means missing the opportunity. So especially when it comes to

financial decision, you know, I mean, the the the perfect timing or the per perfect conditions, they’re never gonna be there, you know, like Im all for due diligence and mark analysis and and and being good at underwriting, but analysis paralysis can cause you to never never leave the gate. Youre never gonna be fully ready, you know. So you know and then also so many of those true lessons, you know, come by simply doing.

So

so does does it come with a risk of fail failure? Absolutely, 100%, you know, but again, there’s no greater accelerator to learning than than failure, you know. how do you know to move forward? You know, see if you can get enough data, you know, aiming for that Jeff Bees of 70% of the data, you know, to to make a decision. you know, and the overarching tip is is

You gotta act, you know, act before you probably feel ready.

Michelle Kesil (22:55)
Great. Thank you so much for sharing all of that.

Before we wrap up here, if someone wants to reach out, connect and learn more, where can people find you?

Ittai Shiu (23:03)
so I do have an Instagram account. It’s called The Unintentional Investor. and just you know quick explanation of the name because I you know I don’t I don’t want folks to to to think that they’re they’re by by tuning into The Unintentional Investor that they’re tuning into somebody who doesn’t know what they’re doing. I I I you know when it comes to

acquiring assets. It’s all it all should be very intentional. but and I know I know it’s a common feeling out there. You know, I mean, what actually happens after that that that purchase often feels very unintentional. It’s like a you’ve got a tenant that stops paying or a rehab that goes sideways or life changes. You know, a child’s born or or a parent needs care, you know, or

a property and portfolio becomes something different than what you what you envisioned. So while we intentionally acquire assets, we unintentionally kind of inherit the situation, the circumstances, you know, I mean, and and fortunately, unfortunately, you know, that’s where the real lessons emerge. And, you know, those those are those lessons that are that that end up being very unique to to every investor.

Michelle Kesil (24:25)
Thank you for that. Well, appreciate your time and your story. Thank you for being here.

Ittai Shiu (24:30)
Michelle, thanks for having me.

Michelle Kesil (24:31)
course and for the listeners tuning in if you got value make sure you’ve subscribed we have more conversations with operators like Ittai who are building real businesses and we’ll see you on the next episode.