Kenji Asakura and Letizia Alto are experienced and passionate real estate investors. They know the ins and outs of 1031 exchanges, hiring real estate agents and property managers, bookkeeping for real estate businesses, and much more — and they share that knowledge with other physicians and high income earners through their business, Semi-Retired MD, which offers courses, coaching and more. 

“Any real estate money that we make, we reinvest back into real estate. We’re not taking out that real estate money and spending it on niceties — we’re re-investing it year after year, and that’s one of the reasons we’ve been able to grow our wealth so quickly.”

Since their last appearance on Money Checkup about a year ago, Kenji and Leti have nearly doubled the size of their real estate portfolio. They have begun transitioning out of clinical medicine — both are now moonlighters — to focus on their real estate business and Semi-Retired MD. 

ABOUT THE GUESTS:

Kenji and Letizia are hospitalists and the co-founders of Semi-Retired MD, which is dedicated to helping physicians and other high-income professionals achieve financial freedom as quickly as possible through real estate investing. As part of their mission, they are very active in their blog and Facebook communities and they have trained more than 1,000 students in real estate investing. Kenji and Leti live in the Seattle area with their two children.  

Social, website, book link:

Website: semiretiredmd.com

Zero to Freedom: https://semiretiredmdvip.mykajabi.com/zerotofreedom

Fast FIRE Bookkeeping: https://semiretiredmdvip.mykajabi.com/fast-fire-bookkeeping 

Facebook groups for: Physicians and their spouses, Dentists and their spouses, Lawyers and their spouses, High-Income Professionals and their spouses

EPISODE HIGHLIGHTS:

• Since Kenji and Leti were on the show about a year ago, their portfolio has grown from around 40 units to around 80. They’ve grown from small duplexes and fourplexes to their largest property ever, a 32-unit building.
• Despite the pandemic, property prices have not come down as expected. It’s still a seller’s market. Kenji and Leti have bought multiple properties in 2020 because they’ve been able to identify unique opportunities and good deals. 
• Bonus depreciation has forced Kenji and Leti to turn over properties faster than ever. They sold five properties last year and five more this year and used the profits to buy new properties via 1031 exchanges. 
• When you purchase property via a 1031 exchange, you have to identify the replacement property within 45 days and close on the property within 100 days. Leti and Kenji typically identify a desired property, get it under contract, and then put several properties up for sale at high prices to see what offers they get. Whatever they decide to sell, that sale forms the basis for the down payment on the next property. 
• Kenji and Leti now have relationships with more than 200 agents in 93 markets across the country. They match students with those agents as part of the course so they can invest in one or several markets depending on their needs.
• Banks got more conservative at the start of the pandemic, tightening underwriting rules or asking for larger down payments. But buyers can also use COVID-19 to their advantage, pushing sellers to work with them so they don’t have to jump through additional hoops to find another buyer. 
• Kenji and Leti generally prefer selling and doing 1031 exchanges to refinancing. But the properties in their portfolio now are all cashflowing well and have appreciated a lot, so they may begin doing cash-out refinances instead. 
• Lots of real estate investors do “substandard bookkeeping” using Excel. Kenji and Leti tried to hire several bookkeepers and felt they didn’t understand what kind of information they needed to make business decisions. So they hired a bookkeeper, explained what metrics they wanted to collect — turnover time, vacancy days, cash flow for each property, etc. — and created a program for real estate investors. 
• In 2021, Kenji and Leti hope to travel more, launch a course on rehabbing rental properties, and spend time in Europe. Both are now moonlighters rather than salaried physicians.

WORDS OF WISDOM: 

“The key is having a good agent and being on top of their list and getting access to off-market properties first, before anyone else.” 

“Any real estate money that we make, we reinvest back into real estate. We’re not taking out that real estate money and spending it on niceties — we’re re-investing it year after year, and that’s one of the reasons we’ve been able to grow our wealth so quickly.” 

“The lowest risk is to have multiple properties spread everywhere — because of natural disasters, because economies change, and because they’re chips you can trade.”

“You can make any market work. It’s just that some markets have additional challenges.” 

“Whenever you’re in a challenge, say, ‘how can I?’ Then figure out every possible solution and try them, and never give up and say ‘this is impossible.’ There’s always a possible solution, you’ve just got to figure it out and try to hit it from as many ways as you can and be very, very persistent.” 

“If you don’t know what your books look like until next January, that’s too late. You need to become the CFO of your business. We actually call it the CFFO, the Chief Financial Freedom Officer, because you are creating your financial freedom by doing your books the right way and maximizing the profits from your business.” 

“A lot of people bank on appreciation when buying properties. They think they’re investing, but what they’re doing is gambling. Make sure you know how to do the numbers and make sure that you are very diligent about plugging things into the cash-on-cash calculator and taking out all the risk that you can before you buy an investment property.”

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If you enjoyed this episode, revisit Episode 25: Cashflowing Rentals, REPS, and Financial Freedom with Semi-Retired MD.