Shawn Baxter - Professional Real Estate Investor While Working A Full-Time Job
LISTEN TO THE FULL EPISODE ON:
Many people work hard in their W-2 job to be able to do real estate investing on the side. What if your W-2 job allowed you to learn real estate investing WHILE you worked? Meet Shawn Baxter. By day, Shawn is a truck driver that travels all across the US. Because of his role, he is constantly listening to real estate investing podcasts and audio books all day long. Because of this dedicated time commitment, he puts in MORE time as a real estate investor than his truck driving job. This allows him to have the coveted "real estate professional" tax status and all the tax benefits that accompany it. Hear Shawn share how he's using real estate to build wealth, from house hacking to utilizing a home equity line of credit, to infinite banking, to a self-directed IRA. He's learned a lot while he's on the road, and is excited to build an amazing life through real estate.
In this episode hosted by Mike Swenson, we discussed:
- What criteria and features Shawn was considering when evaluating real estate investments.
- Balancing between doing tasks yourself and hiring professionals.
- Finding partners and building trust with them on your real estate journey.
- Entering a market and betting on long-term appreciation and increased rents.
- Taking action despite market uncertainties.
- Shawn's dual job approach allows him to be considered a real estate professional for taxes despite working a full-time job as a truck driver.
- His willingness of getting out of his comfort zone and how it opened doors to valuable experiences.
Timestamps:
00:00 - Intro to Shawn's Career
03:01 - Shawn's criteria for pursuing opportunities
09:21 - Importance of taking action
10:18 - Starting with fix and flips in Utah
11:46 - How many podcasts Shawn listen to in a given week
13:32 - Tax Benefits as a real estate professional
20:34 - Utilizing a self-directed IRA and other tools for future investments
25:42 - Taking action while facing challenges or mistakes
29:33 - How to find Shawn
Connect with Shawn 👇🏼
https://www.instagram.com/shawn.baxter.1650/
https://www.facebook.com/profile.php?id=100079330765648
✅ SUBSCRIBE HERE IF YOU'RE LOOKING TO BUILD WEALTH THROUGH OPPORTUNITIES IN THE REAL ESTATE INDUSTRY
📈 GET STARTED INVESTING TODAY AND ACCESS OUR DEAL LIST!
💵 PARTNER WITH US ON BIG DEALS!
👨👩👧👦 BUILD YOUR REAL ESTATE AGENT CAREER WORKING WITH INVESTORS HERE
🎙️ LEARN ABOUT REL FREEDOM & HEAR MORE REAL-LIFE STORIES
💵 FREEBIES: DOWNLOAD YOUR FREE FREEDOM FOUNDATION BLUEPRINT
🏠 LOOKING FOR A REAL ESTATE AGENT ANYWHERE IN THE US? FIND A TOP AGENT IN YOUR COMMUNITY HERE!
👨👩👧👦 JOIN OUR FACEBOOK COMMUNITY
🎧 SUBSCRIBE TO THE REL FREEDOM PODCAST 👇
Apple Podcasts
Google Podcasts
Spotify
🔗 LET'S CONNECT 👇
Facebook
Instagram
TikTok
Minnesota Real Estate
Read the full transcript here:
Shawn Baxter
Hey thanks Mike appreciate it glad to be here
Mike Swenson
So why don't we go ahead and just get started and you share a little bit about your journey your experience in real estate and we'll go from there
Shawn Baxter
I'm technically mostly out of the Utah Market that's where I kind of grew up been back and forth that's where like the driving come companies out of that I've did um I mean my real estate experience started back in like 2006 when I used to work at like a cabinet company and one of the salesman's there says hey I've got these friends who are buying properties then they rent them out to people and a lot of their clients are out of California because they got lots of money they got to do with and I'm like well let's see what you got to offer and so it ended up that we went and looked at houses and I started doing like fixing kind of flipping to them for their clients because my dad was a general contractor so I've my whole life ID grow up with him so I knew lots of different things so we would buy a house we would fix it up sell it to his investors down in California and I'm like when can I buy him and keep them myself for what you got going on so that's kind of what I ended up doing with him that's kind of where it started at and then through that I bought a couple and we just kept going
Mike Swenson
So what types of properties were you looking for or what was a fit for you location certain number of bedrooms bathrooms style of property certain value ads what what was kind of the criteria you were identifying for for for what you wanted to jump on
Shawn Baxter
They were primary single family um they were three to four bedrooms two bath right around probably the 15 well probably 1600 to 2000ish square feet wise was their kind of primary size that they were looking for which were a lot of the areas is what they were really doing
Mike Swenson
You mentioned your dad being a ener contractor so how much of that work were you doing yourself how much were you hiring out for and just maybe it kind of just depended on what what type of work it was and what you were comfortable with
Shawn Baxter
Yeah I mean in in the beginning well for the most part it was all of it I mean I well the first one we did it was more of like personal like I want to do all the work myself I want to make this look really good so the first one we went in and did redid All the flooring I did a new kitchen in it cuz I worked in a cabinet shop I we stripped out wallpaper we I mean in other words we probably really worked for about $2 an hour because I used I had some other people come in with me because I didn't have the money so to buy these houses so I brought somebody in with me to split it so it was like a way to say I don't have it means to it so let's find somebody else who has a means but I have the expertise on doing all the other work myself so long answer to your question is like we did everything ourself
Mike Swenson
Well and just to to clarify that too because I have so many people that ask you know how to get started and how to find you know lenders or how to find money people so in this case you said Okay I I don't have the money at this stage so I'm going to be willing to sacrifice and do do the work and then the person coming on is going to provide the money and really their job is just being hands off they're providing the money and then you guys were you splitting it 5050 or was there some other Arrangement or how did that work out
Shawn Baxter
On this one particularly we did all the work ourselves too so they brought the money I brought the knooow pretty much and so we still spit split at 5050 but I they wanted to learn so that why we did split it 5050 but I've done it before that exactly what you said it's like hey I don't have the money I don't need the money go to somebody else family friends anybody else that you they might know too and say hey you know what I've got this opportunity but I don't have the funds for it are you willing to put up the money for the funds and we can split it whichever way we want to and if it's something like yeah I don't know can't do all the work so it's like all right we got to hire somebody else or I can do all the work it's like well I might want to split at 40 60 just because I'm doing a lot more work but it's still a great deal
Mike Swenson
Well and I think for a lot of people don't be afraid to to do that don't be afraid to find those people because if you're planning on doing all the work and trying to save up all the money at the same time it's just taking a lot longer and you are providing a lot of value by going through the property and doing the updates and so don't be afraid to find those people that want to invest because there's a lot of people out there that don't want anything to do with it but they trust you or have worked with you or know you or they just want to make money too and so don't be afraid to find those people that can really help accelerate your learning curve and give you a lot more experience that you can then use for future properties
Shawn Baxter
Yeah see and even yeah that one but like my first rental that I personally bought not The Fix and Flip Side it was like 2006 era and you didn't have to put any money down but people goes oh that would be so awesome and I go yeah but I also had to subsidize that out of my own pocket every month so people the day says no you has to have cash flow but the way I looked at it and I still would kind of look at it the same way today is if I had a save up 20% and like in Utah I mean the average house is $400,000 so if I had to save up $80,000 H it would take a long time to save up $80,000 to put a down payment and back then it was like my out of pocket every month was about 2000 250ish so I said you know what I'm just going to buy it I'm going to hold it I'm going to wait for things to turn or go up in value rents will go up and eventually it will start to cash flow eventually but I need to do it today by hold weight
Mike Swenson
If you're going to invest for 10 20 30 years down the road there's going to be different time frames of of where we're at like today with high interest rates it's very different than it was two or three years ago with really low interest rates and so the strategy might change you might have to adapt a little bit um but you can't just say oh I'm going to be completely out of the market right now or not research continue to grow my knowledge and do that for when I'm ready to for that next property um so you can't necessarily time the market kind of like the stock market right um You Can't time the market and when you have the money or the deal comes to you if the interest rates are higher if the numbers work like you said by hold and wait versus having to just wait for that right time to buy because you don't know what we don't know what five years is going to be and we don't know what 10 years is going to be so if it makes sense right now you're accepting of the risk and and tolerating that and the numbers work good enough move forward with it don't overthink it because you need to have the experience for your next deal right
Shawn Baxter
Oh yeah and that that's kind of where I got to is like all that was going on 2008 hit 910 and the Crash hit and it was overthinking of what's going to happen we don't know what's going on so I sat on the sidelines for years until the last few three years four years now and it's like all right it's gonna level out it's gonna level out it's gonna level out and finally I said I just gotta I just got to do it I can't wait any longer and good thing I didn't wait longer because everything just Skyrocket even more m even if even if you buy high today I know in 30 years that that fixed interest rate loan is going to be paid off
Mike Swenson
Talk about your next Journey after you you started with your fix and flips in Utah what what happened next
Shawn Baxter
Shawn Baxter
Yeah so so my next thing was in between that downturn with the construction and everything cabinets I went and worked at a treatment plant which I worked 12h hour days on a rotating shift so I started driving truck part-time because it's like I I would have like five six days off in between the shifts so I started driving truck just to make some extra money so I could save up to do whatever with stuff like that and after that I'm like all right I'm going to go do something different I'm going to take it and I started driving fulltime so well I work two full-time jobs just to see if I could drive full-time because I go I don't know if I can drive full-time but it was was like all right I can do this and with doing that it gave me so much time to listen to podcasts listen to audio books all this other stuff so I became I um so much information that it's was unbelievable of all the different strategies in real estate you could do
Mike Swenson
So you uh right now so you're you're driving truck um how many podcasts would you say that you listen to in a given week
Shawn Baxter
Well I listen to I mean I drive for about 10 hours a day so I listen to 10 hours a day plus of podcast audiobooks um sometimes I'll put on like um like audio for like YouTubes or just anything I can possibly line up because I actually do a um like in the tax strategy thing is like I can file for professional tax um status because I do more hours than my W2 which is pretty hard to do for most people because they've got a W2 but mine's I can do it simultaneously so I that's one of the benefits that I figured out listening to podcast is one of the things I can do so now I can depreciate more properties I can dep depreciate right off my W2 income so that I can push all my tax taxes farther down the road so I can use that money towards more properties
Mike Swenson
And that is something that um a lot of investors that I've talked to or work with like they're working towards becoming a real estate professional um so that they can have those tax benefits but because you're able to do that while you're on the road um now you're able to to double dip you're getting the tax benefits of being a real estate professional as well as working a job getting paid for that as well so
Shawn Baxter
Oh yeah yeah and that's one of the things I mean like the other thing like house hacking I mean for starting out as anybody house I think house hacking is one of the easiest ways one of the easiest ways to get involved in real estate so it's like now since I'm on the road I can I can buy a house as a primary resident I make sure I can have a room like usually in the basement or somewhere in there that I can buy it I can have my stuff there when I come back in town I have my own room there so then I rent out the whole rest of the rooms of the house to a family or other people or however it needs to happen and then part of my agreement in that is I am moving out after a year because that's what I have to stay here here and I'm not here enough so why have a place that sits empty when I'm not around and they're they're they get discounted rent for that first year and I get uh the lowest interest rate possible I get a three and a half to 5 and a half% down payment depending on your loan strategy you use so it gets me in there and then I can move to the next one and the next one and that's how I got a primary resident back there in Minnesota with you is because there's a we have a stop back there in Minnesota that we go to so took a it took a little bit of jumping through hoops to say hey you're been in Utah but now you're back here how's this your primary resident it's like well let me explain and they go oh okay so it took a little bit but I knew about it and if you don't explain or I could have said oh okay and given up on it it's it's one of those things that you need to figure out a way and explain it to some people to get it to where you need to get it and then they'll understand
Mike Swenson
Yeah and I do remember that it it wasn't smooth at the end we had uh just trying to make sure everybody was understanding how this process worked but but that is pretty cool and you know you know obviously my my understanding doesn't need to be at the same level as a lender or you know an underwriter but at the same point you because you're a truck driver you're able to grab different routes wherever you want throughout the United States and so in this case now that you found a property with us in Minnesota okay I'll just grab the routes that make me get back to Minnesota so when you need to come back here you come back here and that's considered your primary residence at that time but you have that flexibility in the future where you can do what you want to do because as other routes come up you can go take other routes and so you really as ack driver have a ton of location flexibility to be able to house hack in different locations as you continue your career
Shawn Baxter
Yeah and that and that's kind of what it was too is like they they it was out of the ordinary so they didn't understand and didn't like it so it's like okay this is how the it's going to happen and they go okay so that was one of the benefits I could do from truck driving
Mike Swenson
So then talk about what other stuff that you're working on too or what other ideas you're exploring for the future
Shawn Baxter
Yeah I mean a lot of the other stuff like listen to pod all different types of podcasts um I I learn like the infinite banking system so they that's talk about that a little bit for people that that may not know that yeah so what that is it's basically it's a whole life insurance policy that it's tied against and usually like the first year you don't see a lot of growth in it but after year one and two depending on your policy it has a lot of cash value to it so you can actually like instead of saving money in like a bank account or a high yield account or something it goes into this policy and I can actually either borrow against it as a down payment on a property then pay myself back to it which I did have done on a property it actually helps out like with the property I bought with you in Minnesota there I it actually helps out because it's got that cash value so banks on traditional on a rental property they want to see that you have liquidity so you can use that cash value as liquidity even though you're making interest higher interest on it and you can B like if I something comes up I can borrow against it so it's still making all the money that I've got in there on the interest it's not like the bank that's like if I pull $20,000 for down payment I now don't have $20,000 to get interest on it and it doesn't work that way with that infinite banking system so it has a lot of benefit and you can use it you can use it any way you want the other benefit is like oh I'm it's can be it it's pretty much a loan against it so you have to pay it back but if I have something come up it's like oh I can't make a payment on it it it doesn't matter I can hold off for a month or two I can hold off for a year if I needed to depending what's going on but you always want to pay it back so that you can borrow against it again so it's like if not you're kind of robbing from yourself from setting it up
Mike Swenson
And we have clients that that use that we have other investors that have done that before and if it's not something that you've looked into in the past if you're listening to this episode look into it and see because there's there's benefits and I think that's the cool thing about real estate is there's all these different levers and triggers that you can use to pull have access to money when you need it and then yeah like you said you you pay it back and then when you're ready again you can you know pull back out against that if you want to to or you can go pull a different lover or a different lover or you've got a friend that wants to lend you money so there's a lot of options out there and I think that's what holds people up is the creativity or understanding all the different options that are out there and you're somebody that has understood okay I can do this I can do this I can do this and you just move yourself a little bit forward a little bit forward a little bit forward and then you mentioned too offline you know having a 401k you know using that into a self-directed IRA home equity lines of credit about some of those other tools at your disposal that you can use for future Investments
Shawn Baxter
So my home equity line of credit since it's a rental property sometimes it's hard to do but since I bought it in 2006 there's a lot of equity into it so the credit union Local Credit Union here I says hey I'm buying this property can you do a home equity line on it for that because there's so much Equity onto it so I can buy this other property and they're like yeah we'll do that because you your equity's got a lot of equity so we're we're we're sitting in pretty good standings if that hap something happens to happen which is very uncommon for a uh investment property but if you got lots of equity and you got to get it out it made it worthwhile so that one is that or even if can do it on a primary home and use that back and forth that's always a good way to get money as a way to do something with um yeah for like my 401k at work because I mean driving truck's only going to be a stepping stone to get to doing more real estate so knowing that I actually work actually does a 401K Roth so instead of the regular 6500 $7,500 depending on your age I the Roth 401k Roth at work it's over $20,000 that I can put into it and so I Max that out with an HSA also so that I can use all that money when I leave in a shorter time because it's not going to be a 65y year career for me till I'm 65 so I Max it out so then doing that the Roth I like the Roth especially if you're younger it's all come it's pre-taxed so that you pay tax a day and all the growth will be taxfree but I also use that and depreciate my properties against it since I'm professional status so I defer all that taxes against it then once I do leave I'll have a big chunk of money that I'll roll over to my self-directed IRA that will be already taxed so all the growth will be able to be taxfree then I can yeah the the self-directed IRA is another thing I'm doing so I got lots of things going on as I'm going through this journey so I've actually taken that self-directed Ira from an old employer that I from the treatment plan I worked at and I actually moved it over to that instead of just sitting in there in the stock market with them and actually lend it out to another real estate guy who bought a short-term rental so that I make a guaranteed 12% off of it so yeah
Mike Swenson
So you truly are a real estate professional I mean let's not let's not um underestimate what you've learned as a as a truck driver listening to podcasts all day so you strategically are doing some really cool things that are helping your future and yeah to be able to have that self-directed Ira make interest on it be able to use it for a property when you want to so um I think more than anything yeah you've demonstrated you know a lot of the the bells and the whistles the different strategies because you spend all day learning about it which is awesome
Shawn Baxter
So yeah yeah and yeah it is a professional but the way the IRS looks at it on some things it's like no you're not a professional in that state of it but yeah it that the problem the problem is too that some people they'll just take all this information in and not do anything with it so it it's good to say I've learned something let's take it go out and do what I've learned with it then once you've hit another wall it's like okay what's my next step come back and say I need to learn the next step but it's something else is moving and not just doing nothing
Mike Swenson
Yes and I think that is about as good of advice as we can give to people is you have to take action on these things to learn and adjust and get better versus sitting back and not doing anything with it and so you certainly are taking action and moving the ball forward and yeah you're going to mess up on some things there's going to be some challenges um but at the same time you're not going to learn and get better unless you do it
Shawn Baxter
Yeah in real estate some people go I want to get into real estate and it's like well what type of real estate do you want to do there's just so many different Avenues on the real estate side that you somewhat have to learn take 90 days and learn all the different Strat IES learn what type of what you're interested are you interested in single family are you multif family storage units properties just RW land um there's just so many different types it's like just take 90 days and learn about them and which ones like interest you it'd be like somebody saying I wanted to be a doctor so you show up to school Say Hey I want to be a doctor and they like what type of doctor there's too many different types you got to pick one and they're like I don't know well go figure it out see which one's interest yet then come back and let us know which one you want to be
Mike Swenson
Yeah and it can change over time and so you know you your path might change but you know pick a lane that makes sense and then yeah it'll it'll adjust as you go
Shawn Baxter
Yeah it's it's good to like start with just one but then switch it's like right now I'm done these other things I have things moving a month mon ago I went down to uh Puerto Rico for this hotel Summit thing that just happened to hurry and come come up that I met people at uh there's pce morby he he's he's a he's got a big Community which is amazing I definitely say find out that he's got students all over the country that are more than willing to help more than willing so I got invited to go to one of what do you call the community Camp up in Montana and I met people up there that I hadn't ever met and then with that that's how I got this noticed about this hotel Summit thing in Puerto Rico so went down to Puerto Rico to see what was going on for another Aven learn something new and why we were down there we learned about the extremely beneficial tax benefit that the government's giving Which is a US Territory country so there's no passports to get down there and we teamed up and we bought a property while we were there and so that's just going to be something else we learn just getting getting out into different places too meeting new people opportunity just will unfold itself if you're willing to get out of your comfort zone
Mike Swenson
Awesome. I love it well thank you so much Shawn for coming on I've appreciated everything you've shared and there's I mean we could spend an episode on every little thing that you talked about so maybe we'll have to have you come back again and share again cuz you've got a lot of cool irons in the fire if anybody wanted to reach out to you and and learn more or just to be able to bounce ideas off your chat with you how could somebody do that
Shawn Baxter
Yeah I mean DMing me is probably going to be the best way um I don't know if you can see on the screen it's like that's my Instagram handle: shawn.baxter.1650
You can DM me just under my name Shawn Baxter on Facebook and I'm more than happy I got lots of time I can talk on the road so reach out let's have a conversation see if we can work together and partner up move forward
Mike Swenson
Awesome well thank you so much for coming on Shawn and sharing your story I'm excited to see where it continues to go in the future but thank you so much for for sharing with all of our listeners thanks
