Retire Early with Real Estate: Shawn Miller’s Investing Strategy

Shawn Miller (00:00)
The contractors is the biggest thing. And I would advise people never pay a penny up front. If they need materials, go pick up the materials, meet them at Lowe’s, but don’t pay them a penny.

Michelle Kesil (01:44)
Hey everyone, welcome to the Investor Fuel podcast. I’m your host, Michelle Kesil Today I’m joined by someone I’m looking forward to chatting with, Shawn Miller, who’s been making serious moves in the real estate and investing space. So excited to have you here on the show today, Shawn. I think the listeners are really going to take something away from how you’ve approached building your business and being able to…

retire in Puerto Rico and yeah, live an amazing life from there. So let’s dive in.

Shawn Miller (02:18)
Okay, sure. ⁓

Michelle Kesil (02:19)
Yeah, so first off, for people who are not familiar with you and your world, can you give the short version of what your main focus is?

Shawn Miller (02:28)
Well, I’ve been a real estate investor for over 20 years. ⁓ My philosophy is always that I’ll buy anything with land, but I do it within a limited radius, 20 to 30 minutes from my home when I lived in the States. And that way I could keep a close eye on my properties and go check on them regularly and so forth. But I…

have everything from old single-wide mobile homes, apartment complexes, industrial, anything that’s a deal that includes land.

Michelle Kesil (03:01)
Amazing. How did you get started with this?

Shawn Miller (03:04)
Back when they had cassette tapes, I bought a course by Rust Whitney, How to Get Rich with Real Estate. And ⁓ listened to those and went to some of their different shows and events. And over time, I applied the principles I learned and started investing in real estate.

Michelle Kesil (03:30)
Amazing. Can you expand on what some of those principles were?

Shawn Miller (03:34)
Well, it’s been over 20 years, so I don’t remember the exacts, but one of the most important principles I use is the 1 % rule. And that means if I spend $100,000 on a property, the rent needs to be at least 1 % of that.

Michelle Kesil (03:40)
any principles that you’ve used.

Shawn Miller (03:54)
There’s a lot of more complicated people who use the cash on cash and all sorts of different ways to calculate returns. But the 1 % rule is just so simple. And for me, it’s been very reliable.

Michelle Kesil (04:09)
Awesome. So what has been like the key to keeping your business running smoothly after all these years and all these different properties that you hold?

Shawn Miller (05:09)
I had to learn the burr method before it was advertised and actually, actually, you know, a thing, so to speak, I just kind of did it by necessity. So that was definitely the key thing for me is to do that.

learning all the local laws, doing the evictions. I’ve always been self-managed. I still am. I have an assistant that takes care of all the book work for me. But if a tenant has a problem, they text me and then I text a contractor and then it gets fixed.

Michelle Kesil (05:42)
Nice. So yeah, a lot of the listeners are maybe earlier on in their investing journey or they’re looking to level up. And why are some maybe challenges that you faced that you now have the wisdom to share to people that are in those earlier stages?

Shawn Miller (06:07)
Well, the number one biggest problem by far has always been contractors. And I got scanned by so many. There are some great contractors, but a lot of them, honestly, are people that could not hold down a regular job. And when I expect them to show up on time, do what they said, and…

That sort of thing is a big problem. So when I find a good contractor, what I’ve done once I got to the size, as I said, made an agreement with them, I’ll keep you busy as much as you want, as long as you promise to only work for me. that really has went a long ways towards now I have people basically on call and they always take care of my situations.

But anytime I have to get a specialist, it’s always an issue. But now I’ve got a pretty good team.

The contractors is the biggest thing. And I would advise people never pay a penny up front. If they need materials, go pick up the materials, meet them at Lowe’s, but don’t pay them a penny.

They need half down, half up front so that they can buy the materials and then you never see them again.

If you can, only use a contractor that owns real estate. A lot of them will be renting. And even if you go to court, you win, you get a judgment, there’s no way to enforce it. If they own the property they live in, you can always put a lien on their house and generally it’ll get paid.

Michelle Kesil (07:49)
Yeah, that’s some good advice. Thank you for sharing that. So every operator I know has moments in their business where things got more or less real. Maybe a deal went sideways or you had to make some fast pivots. Would you mind sharing one of those moments that you’ve experienced on your journey?

Shawn Miller (08:13)
There was one year I had to pay more in taxes than I made. Yeah, that’s crazy. So I had another business, an IT business, and it was not very successful and I didn’t make much that year. ⁓ I had just recently went through a divorce and things were tough. So anyway, whenever you pay

equity on your mortgage, the government considers that as profit. So that year, I think I made $20,000, actually, you know, money I put in my pocket, and I had to pay out like $25,000 in taxes. So that was tough. But you know, as life progresses, I made things work and, you know,

It’s part of it. There’s going to be lame times. Anytime there’s a business owner, you’re going to have challenges.

Michelle Kesil (09:06)
Yeah, absolutely. think that’s part of the entrepreneurial journey. it’s, yeah, kind of what you go through as you are in it for that long term vision.

Shawn Miller (09:18)
Absolutely, you gotta be long-term in real estate. There’s many people that make tons of money short-term, flippers, wholesalers, but the day they stop working, they stop making money. Buy and hold is generational wealth.

Michelle Kesil (10:07)
What markets are you holding your properties in? Are you in one certain part of the US nationwide?

Shawn Miller (10:17)
So I used to live in Tennessee, so everything I had was within 30 minutes of my house in Tennessee. One time I had a little bit further, like an hour away, but I found that I didn’t check on those properties as much.

I dreaded going out there, so I sold all those properties and consolidated. I would advise people don’t get anything more than 20 minutes from your house, 30 minutes at the most. That way it’s local. You know, after you’re a very seasoned professional, or maybe if you’re part of a REIT trust, you can do something far away. But for the beginner and almost anybody, just buy stuff local.

so that when a contractor says this or that, you can drive out there and take a look at it.

Michelle Kesil (11:01)
Yeah, that’s good for people to hear. So what are you most focused on solving or scaling next when it comes to your business?

Shawn Miller (11:13)
Well, for me, that’s retirement. I’ve got over 100 rentals and I’m not trying to grow anything. We’re just maintaining and ⁓ well, as I say that I’ve got a closing next week, but it’s an amazing deal. I couldn’t turn it down. ⁓ But in general, I’m just trying to, there gets to a point where there should, in my opinion.

Michelle Kesil (11:15)
Amazing.

Shawn Miller (11:42)
where enough is enough. I don’t need to be a billionaire. I’m happy where I’m at. And I would rather have ⁓ freedom than chasing another apartment building.

Michelle Kesil (11:58)
Yeah, that’s very valid. Yeah, I think some people can get caught up in the forever chasing versus the enjoyment of wire doing this and yeah, living.

Shawn Miller (12:12)
It’s addictive. Somebody

asked me, why are you buying another one? Like what? Couldn’t turn it down. It was an amazing deal. ⁓ But it is definitely addictive. I will say that, you those deals and like celebrating, you know, to me, I’ve always said that you make your money when you buy the property.

You can cash out at any time, you can refinance, you know, you got that rental income. But when you buy the property, that’s when I celebrate, that’s when I really know that I’ve made the right, made the money.

Michelle Kesil (12:45)
So how are you managing these 100 properties? What’s your process?

Shawn Miller (12:53)
Well, I have tenants pay rent online. Apartments.com is the one I use. There’s several different good ones. ⁓ I have a assistant in Tennessee that can sign leases. And I have a ⁓ attorney that does evictions. I have contractors that do repairs.

To me, I think it’s sort of weird that people pay 10 % to a property manager when generally speaking, it takes me a couple of hours a week to manage these properties. I do advertising online. I put a lockbox on the door and somebody’s pre-qualified, then I give them the code. They go look at it. If they like it, they reply.

I always focus on long-term tenants. Somebody says they’re looking for something. One of questions I ask pre-qualification is, how long do you want to stay and why are you moving? Oh, I’m just looking for something for a year until my house gets finished or I’m looking to buy. Those are not the tenants I’m looking for. The perfect tenant says I want to live there the rest of my life. I don’t always get those, but I’ve got several properties that have tenants over 20 years.

And every time somebody moves out, you gotta go clean up the place, remodel, paint, know, flooring. Depends on the situation, of course, but when a tenant’s there 20 plus years, you don’t do any of that. You just collect rent and do maintenance as needed. Those are your winners, so.

Michelle Kesil (14:27)
Yeah, it sounds like you’ve really found a simple strategy that works for you. And I think that’s something that people can benefit from because, there’s so many ways to make things extra and complicated. And sometimes it just needs to be more simplified.

How did you learn the knowledge and the skills that you did?

Shawn Miller (15:33)
Well, I took a mentoring course when I very first started, but a lot of it’s just trial and error. There’s a phrase out there, ⁓ analysis paralysis. Some people study so much and sometimes the best thing to do is just jump in, learn how to swim out of survival. My biggest regret is not buying some of the properties that I should have bought.

And when I looked at it’s like, well, I’m not going to make very much on my monthly rent. Maybe it’s just $100. It’s not worth the time. If I had bought those properties 20 years ago, what I didn’t realize is I would have raised the rent. And over 20 years, it at least doubled. And they would be paid off by now. So.

That’s my biggest regret is that I didn’t buy properties that I should have because I was worried about immediate cash flow when I should have thought about long-term cash flow.

Michelle Kesil (16:39)
Yeah, absolutely. And when it comes to scoping out which properties are worthwhile investments, is there any sort of criteria that you have?

Shawn Miller (16:55)
Well, my philosophy is I’ll buy anything with land. have single wide, old junky trailers, and I’ve got big houses, apartments, industrial. So anything that’ll cash flow is good for me. I generally use the 1 % rule. The rent should be at least 1 % of the all in cost.

I find it’s a lot more reliable than the cap rate, which a lot of people can interpret and add different things that they shouldn’t. The 1 % rule is not at all inclusive. It’s just a very simple that works most of the time.

Michelle Kesil (17:30)
Yeah, absolutely. Are there any other rules or philosophies that you feel are benefiting and worth sharing?

Shawn Miller (17:40)
Not that I even think of.

Michelle Kesil (17:41)
Okay.

Any strategies or advice you have for people that are earlier on in their journey?

Shawn Miller (17:50)
Be persistent, stay tough through the tough times, and know that whenever you do a 15 or 20 year mortgage that the property will be paid off in 15 or 20 years. Whenever you get that awful tenant that destroys the place and you want to throw your hands in, just realize, hey, they’re paying your mortgage for you and it’s eventually going to get paid off.

One of my close friends loves pets. He gets a premium rent and he loves it. Personally, I have a lot of problems with pets. don’t love pets. Google dog peed on heat pump. And there’s so many results. The pee is corrosive. I end up with a new heat pump, which is easily 10 grand.

Michelle Kesil (18:30)
You

Shawn Miller (18:37)
because somebody allowed their dog to go outside and pee. They don’t care, they’re not noticing. You where the dog pees?

I’ve had several places destroyed, so I don’t allow pets personally. Even though I have pets, I don’t blame the animals, it’s the owners. A lot of people just don’t care or they don’t have the knowledge to care for their animal appropriately.

Michelle Kesil (19:06)
Yeah, definitely. That makes sense. Awesome. yeah, when like you’re on this track to retirement, are you still managing your properties or what does this transition look like?

Shawn Miller (19:22)
Yeah, still manage them. Just do everything remotely.

Michelle Kesil (19:26)
Yeah, that’s so exciting to get to that position.

Awesome. So before we wrap up here, if there’s someone that wants to reach out, connect with you, learn more about what you’re doing, where is the best place that they can reach you?

Shawn Miller (19:44)
Social media, specifically I would say Facebook, that’s the only one I’m really active on. I try to give back, I try to help others. I started a local group on Facebook where I try to mentor others. I think that we should all try to help one another. Many people helped me on my journey and I’m trying to help others.

Michelle Kesil (20:06)
Amazing. And what’s your Facebook? Is it just your name? People will find you quick.

Shawn Miller (20:10)
Well, I have this handle I developed back many years ago, GovNee, G-U-B-N-I. So if you search that, you’ll find me directly. There’s several Shawn Millers, but it won’t work that way.

Michelle Kesil (20:24)
Yeah, I was thinking that.

Awesome. So yeah, thank you so much. I appreciate your time, your perspective and your story. We need more people in this space doing things in this right way. So thank you again for joining.

Shawn Miller (20:42)
You’re welcome, glad to help.

Michelle Kesil (20:43)
Awesome. And for those of you that are tuning in, if you got value from this, make sure that you’ve subscribed. We have more conversations coming with operators just like Shawn who are out here building real businesses. And we’ll see you all on our next episode.