Why This Maine Investor Reinvests Cash Flow to Buy Bigger Multifamily Deals

Sarah Msuya (00:00)
Sure. So I’m looking to enjoy my life. Like life is pretty short, you know, and I want to have time to enjoy with friends, rich experiences and that doesn’t mean not achieving, as I think my story has proven. Like I’m not sitting around doing nothing, but I’m also in the midst of all that. I am traveling quite a bit. I am taking the time to, you know, go get a facial or get my nails done or like I’m I’m enjoying my life as well. I’m not just grinding, grinding, grinding.

Cody Crabb (02:02)
Welcome back to the Real Estate Pros podcast by Investor Fuel. I’m your host, Cody Crabb. And today I’ve got Sarah Msuya with me. Sarah is a Maine-based real estate investor and agent. She started investing in 2021 and she’s built quickly across multiple asset classes. And what’s interesting about her story is she’s not just waiting for a deal to perfectly fall in her lap. She’s using financing structure and problem solving to make some of these overlooked opportunities work. Sarah, welcome, welcome to the show. Thanks for hopping on today.

Sarah Msuya (02:29)
Thanks so much for having me. I’m excited to be here.

Cody Crabb (02:31)
so I’d love if you could kind of give everyone a little you know, little bio more than I just did, just to kind of give people some context around what you do and and what what you’re up to.

Sarah Msuya (02:44)
Yeah, for sure. so I’m out of the Greater Portland area, in Maine. I invest right here in Maine in a few different counties. so I started out just kind of doing house hacking or small single families and then I I’ve just leveraged equity over time and creative financing to increase the the size of the deals that I’m doing. and I’ve gotten a partner as well for some of them since I started. and now I’m focused on mainly midsize multifamilies, like fifteen to thirty units somewhere in there. still do have you know duplexes four units that sort of thing from kind of the beginning. I’m also a real estate agent as you mentioned so that’s kind of my day-to-day active income and then the investments I have not been really pulling any money from them. I’ve just been using the equity and the the cash flow from them to buy more in kind of an aggressive quick way.

Cody Crabb (03:47)
Mm-hmm. So this is this is gonna seem extra obvious to you because your your background in finance, but just because I wanna highlight this, you you don’t take money from your investments now. I and I find that really interesting. You’ve got it it they’re cash flowing, you’ve got things that in place to, you know, for it for it to be set up, but you aren’t pulling out money. And I’d love to hear kind of your perspective on why that’s a good idea. Again, very obvious, I know, but I just want to make sure we say like. I that is a vi I think that’s a very smart strategy if you can manage to do it.

Sarah Msuya (04:22)
Yeah. So I started out pretty you know, I didn’t have money in the bank. Like I didn’t even I don’t even think I had five grand in the bank when I started. so in the beginning it was because the buildings I was buying they were cheap. So there was a lot gonna be a lot of problems with them. The furnaces were gonna go, I’m in a cold area, so that’s imp more important than like HVAC and other markets. you know, the roofs were gonna go. so I knew that I was gonna need money for these things. So in the beginning it started out with I wanted—

Cody Crabb (04:42)
Yeah, yeah.

Sarah Msuya (04:50)
my goal is to have $20,000 per property for replacing these items. Since that time a lot of these things have been replaced, but I’ve kind of just kept on building for reserves there. because one of the things I’ve learned is the buildings that I’ve sold, when I go to sell them, in order to sell them for maximum value, I end up putting money into the building as well. So you know, I’m like I’ve I’ve replaced roofs, I’ve you know, done a lot of painting or different things, staging. So I end up almost zeroing out on certain properties, especially the smaller ones like that. So that where it started. and then I tend to buy the bigger buildings with my business partner. So with her, we’re trying to buy one big building a year for cost segregation study purposes. So we both have active income from me, it’s mainly as an agent. She’s an agent plus she does a little bit more flipping than I do. So to wipe out that income, the income taxes, we need to buy buildings that we can cost segregate to reduce our tax burden per year. so in order to do that, we have to keep pulling the money from the last deal, whether that’s cash flow or equity, in order to acquire another one to be able to acquire like one big one per year. so and I guess the only exception to that is I did buy like a nice, larger home to live in and so I do use one duplex to kind of help offset the mortgage for my personal home. So that’s the only exception to that.

Cody Crabb (07:06)
Mm-hmm. Gotcha. Yeah, I think I I love that. I mean it’s it it makes sense that you’re kind of looking at this in a larger context. another thing I’d like to to highlight is that I think that a lot of people that have started investing, that obviously then the on the bottom rung, right? You haven’t saved up any money, you want to use it to like escape poverty, maybe. Like this is like your way out of poverty. The first thing someone is gonna think is, well, obviously I don’t have any money. So like you need money to invest.

Sarah Msuya (07:30)
Is that—

Cody Crabb (07:37)
You said you didn’t even have five thousand dollars in your bank account. and I I think a lot of people just heard that and were like, Okay, now now that’s interesting. you said you’ve used some creative financing. can you give us some kind of background on on what you’ve used and how maybe our audience could apply some of those things?

Sarah Msuya (07:57)
Yeah, for sure. And as far as like the very first deal, like I had bought a single family home, I lived in it for a number of years and I got a home equity line of credit on that building and that’s how I had my down payment for my first investment property. So that’s what I mean when I say I started with no money down. It’s like I still had a plan in place as to I bought that property, you know, a while ago. But anyways,

Cody Crabb (08:16)
Yeah, of course.

Sarah Msuya (08:21)
Creative financing. So I I quit my job in twenty twenty two. I had been working at a bank for twelve years. and so banks don’t like to finance you when you don’t have, you know, a two year work history. So that’s where I’m like, I was listening to different things like Jamal Damji, Pace Morby, you know, sub two, wholesaling, seller finance, different creative stuff. And so I was like, I wonder if there’s a way that I can source that would fit into those models. so, and then my business partner as well, she quit her job in twenty twenty three and so that’s when we kind of joined forces and that’s when that really started. so the first one was like a Burr strategy where we had borrowed private money from just someone that I know, who I’d been talking to about real estate for a long time. They weren’t wanting to jump in themselves, but they had some cash lying around that paid twelve percent interest to to acquire that property and then fix it up and then it was worth more money. So then we went back to the bank, refinanced it at that larger value, pulled back all of that private money, paid that person back. Plus they got their twelve percent interest during that time and now we have a free cash flowing property. So that was number one, shortly after that I did a actually at the same time I think I did a subject two deal, which was just a distressed seller who had bought a building maybe a year and a half prior, had some bad tenants, the furnace broke, she fell onto hard times herself just with job stuff and health stuff. it wasn’t a situation where we could put it back on the market and sell it for a profit. So—

Cody Crabb (10:02)
Mm-hmm.

Sarah Msuya (10:08)
She’s like, what do I do? So I had offered to take over her mortgage because she had like a three percent interest rate or something. I was like, if I can take over your mortgage for five years, I’ll give you a lump sum, let you live here for free for a period of time, solve your problems. Now you don’t have a bankruptcy or foreclosure or anything like that on your record. I have the ability to take over a building without me also going under because if I get a eight percent commercial loan on this building, it’s not gonna make sense if I have to get a new furnace, new roof, kick out tenants, do evictions. so that that’s one example that I had done. I still have that one. That’s a four unit. And then I’ve done seller financing for another duplex that I’ve since sold and then I’m doing one right now.

Cody Crabb (11:14)
Mm-hmm. Hmm.

Sarah Msuya (11:28)
Which is sixty percent commercial financing and then forty percent seller note. So just finding ways to put no money of my own into deals has been kind of the way I’ve been doing it for—

Cody Crabb (11:38)
Yeah. Yeah. Yeah. Yeah. I like that. I I feel like I talk to a lot of people on this podcast that have kind of every strategy you could imagine, you know, but the way that you do it sounds so like grounded and like r like a real person could do it. You know what I mean? Like I hear I hear people that are like, yeah, I just borrowed like, you know, five hundred grand from my dad and and like, well yeah, anybody could do that. Like I if we talk about strategy. There’s like there’s not a whole lot of strategies that wouldn’t work with half a million dollars to start. so I I really I think that’s cool that you’re you you you make it look possible. And not just possible, but like in a way that’s like, man, should I be doing this? Like this seems like I that seems like I could do it. you before we started the podcast, you mentioned something that made me laugh. You said, well, I mean, I’ve heard people I heard people that were investing and I was like you know, hey, I’m not I they might I I’m they’re as spout as smart as me and maybe not even as smart as me. Like if they could do it, like so what what do you what have you learned about kind of how smart you have to be, to to be in real estate investing?

Sarah Msuya (12:48)
Yeah, for sure. And and to give anybody encouragement like that’s looking to get into this and thinks it’s not possible. Nobody in my family invests, not a single person. I grew up in a single wide, you know, mobile home. so there’s nothing special about me except for maybe having like the grit and the ability to live in any situation so there I’m not very scared of falling. so right, back to, you know—

Cody Crabb (12:58)
Wow. Like what what’s the worst that could happen? Yeah, I know what you mean. Yeah.

Sarah Msuya (13:15)
similar similar circumstances and that was a perfectly fine circumstance. So I’m not worried about it.

Cody Crabb (13:17)
Yeah, you’re like, “I’m just sitting here and this is rock.” If if you’re on rock bottom, you there’s nowhere to nowhere to go down. So might as well just try something. Yeah. I love that. Yeah, and I think I think some people can relate to that where it’s like, you know, not everybody in this that listens to this podcast is like a beginner investor, but I think that’s really encouraging to hear that like sometimes you just gotta go for it. If you don’t have the money, sometimes there’s ways around it. If you don’t have the time, sometimes there’s ways around it. I mean, as speaking of that—

Sarah Msuya (13:27)
Right. my.

Cody Crabb (13:46)
you mentioned that time is at a very high premium with you. you are doing you’re working as a realtor, you are doing managing properties yourself in some cases even. how? How do you do that? Because you started listing things and I was like, I have no I literally don’t know how there are that many hours in the day for that. So I’d love to hear what what you how you do that.

Sarah Msuya (13:59)
Mm. It’s So I think you have to be okay with imperfection and I grew up a perfectionist, like I remember as a kid, my mom telling stories about I had an activity drawer and I would like structure my day like I was very type A and I’ve had to let all of that go. there’s just no time for it anymore. Like I have a bag from a trip a couple of weeks ago still unpacked in my room, whereas, you know, growing up that would have been done right away. So I just think of what the most important important next next most important step, I think it’s called N I S or whatever. There’s some I think Brandon Turner does a thing with that. But anyways, that’s what I think about for each thing. Like what do I need do to move the dial on family? money, meaning my agent business and my investor business, and then the household stuff, a lot of it I’ve outsourced at this point. I have a cleaner who comes in every two weeks, I have a lawn guy, I have like using DoorDash to do groceries, like to kind of manage all of the mom duties I have or the ones that can be outsourced without affecting my kids, you know. so that I still have that quality time.

Cody Crabb (15:01)
Mm. Yeah. And because there comes a point where like there there comes a point where your time—I mean, so if if you’ve heard of the term like good, better, best, right? Like shopping for groceries is good. You need to do it. It’s something that everybody has to do. s getting someone to help you to get load it in your car or something is maybe even better. Getting someone to deliver it and get it in your house, that’s that’s probably the best way to do it because it saves you that much time. So if you’re able to do something like that the best way that saves you the most time and you can afford it, I mean—

Sarah Msuya (15:25)
Okay.

Cody Crabb (15:37)
There’s, you know, the R—you look at what the ROI is. Shopping takes a long time. So that’s a good example. But—

Sarah Msuya (16:23)
Yeah. I’ve been buying the pre chopped vegetables and steak. It’s like a stir fried package, so it still feels like we’re having a home cooked meal but somebody already chopped it up quicker and that’s the difference between needing to order out or n or being able to make a dinner at night when you’re trying to fit all those things in. So I don’t have it perfect by any means and that’s why I had on my my thing that I had to fill out for the podcast. My opportunity is is time ’cause I’m still working on how do I let go of some of the the bigger items like like operations, business operations is something that you know, now we have property management for like I think maybe thirty some units now, still managing the other ones myself. but we’re slowly transitioning to that or looking for a bookkeeper this year. so just trying to outsource the things that aren’t gonna tank the business if they’re not done perfectly. maybe g you know, figuring out a VA, those types of things. but—

Cody Crabb (17:09)
Yeah. Yeah.

Sarah Msuya (17:16)
Yeah. I mean when you grow quickly, I think that’s just part of it and I I’m an agent and the majority of my agent business is helping first time investors get started. So more than fifty percent of my business last year was owner occupant multifamilies, like two to four units. They live in one unit, rent out the others. so I’m constantly, you know, kind of going back to that and teaching people how to do the same thing to buy back their their time and not have to be so stressed out with things and I think I lost my train of thought a little bit, but yeah.

Cody Crabb (17:51)
No, I I get where you’re going. I get where you’re going. Yeah, I think y you I mean you said it. I think when I hear when I hear people talk about investing as a you know, it’s some people treat it as like a I’m gonna it’s a thing I’m doing. But not many people I mean a lot of people do, but I think a lot of people that are starting out don’t necessarily think of it as you’re starting a business. Like it’s not this isn’t like you’re buying a thing. You’re starting a whole business. So

Sarah Msuya (18:19)
Mm-hmm.

Cody Crabb (18:20)
The the thing that you it see it sounds like you are you’re very much thinking of it that way. I mean, obviously you’re you’ve got the you’ve got some background, you’re in the finance stuff, you’re thinking about how the future and what strategy to do next. so what’s next for you? Speaking of that, what’s what’s got you excited? What are you hoping to to do? Do you have any exciting stuff that you’re working on right now?

Sarah Msuya (18:41)
Yeah, so my business partner and I are in the process of buying fifteen units, so it’s three buildings, two six units and a three unit as a package. so in that I just briefly talked about it earlier. We’re trying to do a hundred percent financing with a forty percent seller financing note at five percent interest for five years and then a second commercial note for sixty percent.

Cody Crabb (18:50)
Mm.

Sarah Msuya (19:07)
So and we’re also doing a refinance of two of our our bigger buildings, a fifteen unit and a twelve unit. So it looks like we’re gonna be able to pull out maybe three hundred thousand in equity from those other two which were bought. One was bought last year and one was bought the year before that. So it’s fairly new. So that would so that fifteen unit and then if both deals work out the way we’re trying to make them work out, then we would have another down payment for another building. the same time as well. and looking to the future, I don’t I don’t really have a twelve and eighteen month plan or a five year plan. I’m kind of just going with the flow and taking on, you know, what I can take on as it comes to me. But a loose plan is I’m looking for one big deal a year for that cost segregation study and just to c continue fine tuning my business through acquisitions but also tightening up the the operations and doing more and more to remove myself out of the business so I’m not doing too much except for acquisitions and that’s the part I love and that I’m good at.

Cody Crabb (20:10)
so one last question before we kind of wrap up here. something that you said about speaking of because we’re talking about goals, you know. you mentioned before we started recording that you you know, your your goals are not like, you know, sitting on the top of the throne of a giant real estate empire. Like you mentioned you’ve got some goals that don’t feel like these massive, massive goals. and I’d love to hear about maybe we c you can tell kinda everyone what we were talking about about you know, what what you actually are looking for and and why.

Sarah Msuya (20:43)
Sure. So I’m looking to enjoy my life. Like life is pretty short, you know, and I want to have time to enjoy with friends, with to have rich— Right. To—

Cody Crabb (20:52)
A lot of those entrepreneur bros, you said that and they were just like, “It is? It are you sure?”

Sarah Msuya (20:58)
rich experiences and that doesn’t mean not achieving, as I think my story has proven. Like I’m not sitting around doing nothing, but I’m also in the midst of all that. I am traveling quite a bit. I am taking the time to, you know, go get a facial or get my nails done or like I’m I’m enjoying my life as well. I’m not just grinding, grinding, grinding. was the first couple of years, but now I’m trying to intentionally peel that back to enjoy doing different things for myself, with my partner, with my kids. so my goal is twenty thousand a month in passive income right now. That could change over time, but and to stop the real estate agent business or to just do referral based or, you know, be kinda picky with it. And then just to chill out and enjoy life being just the acquisitions person. Like that that part excites me, getting a new deal and figuring out how to put it together. But having somebody else handling the bookkeeping and the accounting and the operations and the all of that stuff. and then yeah, just enjoying life and continuing to build would be my main goal for all of this. I don’t know what that looks like. It could be a hundred units, a thousand units, five thousand units. I don’t really have a number goal in that respect.

Cody Crabb (22:13)
Yeah, it’s sort of it’s it’s sort of exciting to just think that anything is possible. I mean, when you’re when you’re in a in a situation like that, some people when they when they hear your goals are not super like defined, they’re kind of like, “That’s not how you should do it. And every move you make should be moving you to the next thing.” And I love the idea that you’re just kinda like, “I don’t know, like we’ll see what happens.” Like that’s that’s so cool because who n who knows? You know, five years from now your life might be totally different and you might have different things you want to do and things that you’re hoping for and so yeah, I I I know what you mean there. well, this has been really, really great, Sarah. Thanks so much for your insight and for your story. I think some people hearing this are really gonna be super jazzed up after hearing this one. so if people wanna, you know, get in touch with you, work with you, they wanna send something your way or ask you a question, how can they get in touch with you?

Sarah Msuya (23:01)
yeah, so I mean my phone number is public. I’m a real estate agent, so I’ll throw it on here too. 207-608-5006. So if you’re looking to invest in Maine, you can reach me that way or if you have deals to look at. I’m primarily really only interested in Maine at this point, but anything, you know, midsize multi. and then for social media I’m on Instagram at SarahTalksREI. So like real estate investing. on Facebook, same thing, and then I have a an agent page as well, which is that ends like Sarah-Msuya, my first and last name. So that’s about it for socials. I’m not really on any of the other ones.

Cody Crabb (23:41)
Gotcha. I’m I’m just surprised there was another Sarah Msuya you couldn’t get the website from. That’s pretty wild. no, but but great—I mean that’s great. Yeah, I think if if Maine is your deal, it sounds like Sarah is a great person to know. Thank you so much for for your time today. and thank you listeners as well for your time. If you liked what you heard today, go ahead and give us a like, subscribe, comment, follow, retweet, all those things. And don’t forget to follow us so that you don’t miss conversations like this one.

Sarah Msuya (23:46)
Okay.

Cody Crabb (24:08)
Sarah, thank you so much. This has been really great and we’ll we’ll see you next time.