A self-described travel bum with a love for people, positive energy and adventure, Cohen’s strong interest in investment was sparked while traveling across the Pacific Ocean via ship. He earned seed money for his first real estate deal by working as a beer man at Wrigley Field and by hawking T-shirts in the street after Chicago Cubs games.
Cohen has been in a speech program to work on his stutter for 16 months and hopes to one day become an instructor in the speech recovery program and a life coach. His love for international travel has not yet been satiated; he will be spending the winter in Latin America.
Cohen received a B.A. in Politics from Whitman College in Walla Walla, Wash.
NuWire: So what made you decide to get involved with the real estate investment market?
Cohen: The possibility of leverage. I’m starting out as a young person with limited capital. I can’t go to a bank and say, “I’d like a loan to invest in the stock market, because I found this great stock.” So to be able to maximize my money, I have chosen real estate investment. The other thing is that I have a tremendous amount of confidence in myself—and really, in real estate I see the only limitations as those of one’s imagination. If you think that something can be done, frankly, I think in most cases, it can be done.
NuWire: Can you tell me a little bit about the markets that you’ve invested in and why you chose them?
Cohen: I did my first investment in Denver, Colorado, near downtown, and the reason I chose to invest there was that the rents were very high compared to housing prices….My investment strategy is for the long run. And my focus is to purchase in the inner city. And so I was looking for a nice city where people want to be, where I could also afford to buy within the inner city. And Denver, in that regard, presented a very unique opportunity.
NuWire: You have two properties there, right?
Cohen: Yeah.
NuWire: And tell me about your process in finding those. Isn’t it an adjoined property?
Cohen: Exactly. I put together an assemblage deal. The zoning was R-2, so for each lot that met certain specifications, one could build two attached units on that lot. And so for my first investment, I knew that I was starting out with a small amount of capital, and I needed a winner. And so I needed something that I could buy at under market value…and then I could fix up to get even more equity, and then be able to get a nice cash flow out of it….And I want a good property with great appreciation potential, so, basically, I’m asking for the world.
I looked at a property that sat on just less than one full lot but met all of the other requirements….When I was looking at foreclosure listings, I saw the house next door was in foreclosure. So my mind got going, and it turned out that the house next door had a little bit of extra land to put that puzzle together.
In looking for properties, first I drive around, and then once I find a neighborhood I like, I’ll walk it or I’ll bike it and put in that grunt work that many investors don’t want to do…to really see what’s going on….I’ll take note of properties for sale, of properties that look like the occupant may be having a difficult time with the upkeep and then pursue as many avenues as I can that way.
I also look over the MLS and foreclosure listings and work closely to build relationships with real estate agents and people on the inside who might have information before it becomes public.
My experience so far in real estate has been [that] there’s no one step of the process that’s really that hard. They’re just a lot of really different skills….That’s one of the things that drew me to it, that’s it’s best suited to somebody like me, who can do a lot of different things, but I’m not great at any [one] thing.
NuWire: You’ve traveled quite a bit internationally. How [have] your international travel experiences shaped your involvement in real estate investment?
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Cohen: Perhaps one seeing the bigger picture of global markets, just in what’s going on in Brazil, or what’s going on in Singapore or Hong Kong or Vietnam or these places that are growing at rapid rates. Just to get some sort of context for: “What does this all mean?” But more importantly, on a personal level, I think, clarity.
What probably sets me apart from most investors…is that I pride vacation time. And frankly, my hope is to take one week of vacation every month for the rest of my life. And what that means for me is that I get clarity. And when dealing with investments, having that clarity is so important.
NuWire: So what are some of the biggest challenges that you’ve faced so far as a young investor?
Cohen: Being completely green to the world of business, perhaps the way that things are really done. I’ve read a ton of books. I’ve hustled in the street. I’ve run small businesses—very small businesses. But…until I got started in real estate, I’d never been on that level, coordinating with that many different professional people and building relationships.
The biggest thing for me was to get over my own fears: my fear of being perceived as a novice; my fear of stuttering so severely—I could not communicate exactly what I wanted to with the person I was working with; and perhaps a little bit of fear of not being taken seriously. But…those fears were never obstacles that I saw would stop me. I…said, “You know, this is what it’s gonna take. I can go for it or not go for it.”
I was talking with [a friend about an online business he started with another friend] and he had no idea that I’d done this business, and so I was telling him about it, and he goes, “Why did you sell your share?” And I thought about it for a second, and it came down to my future: I intend to have an abundance of money. I also intend to be old.
I’m young once, and I don’t foresee money being a problem in the future, but age could be.
NuWire: I know you’ve just purchased [a property] in Walla Walla….Can you tell me a little bit about that?
Cohen: I was able to purchase a charming property in one of the nicest neighborhoods in Walla Walla—walking distance of the campus at Whitman College. And so I was dealing with a market that has shown great appreciation over the past five years. And while much of that has been based on outside investors and speculation, I was able to purchase a nice property…below market value.
My general rule…is you make money in what you know, and you lose money in what you don’t. I’ve been to college at Whitman, so…I know Walla Walla to a great enough extent to feel comfortable there.
And the other criteria that this property met, that I hold for all of my investments, is to have multiple outs….This property works great as a fix-and-flip. But also, it’s walking distance of the college. I can break even cash flow.
In fact, I’m looking for another property in Walla Walla because one of the difficulties in diversifying geographically is having properties all over the place. But having one property or two properties in the same city…doesn’t really make that much of a difference.
NuWire: I’m interested in hearing what your future plans are for the properties that you have.
Cohen: My intention for the property in Walla Walla is to hold it for at least five years as a good rental and then to reevaluate with what the market’s doing….And if I like the direction that the town is going, I’m going to hold that because, frankly, I know very few people of any type who have ever sold a piece of property and five years later been happy that they did so.
One of the strategic ways that I’m buying is where rents are at least covering my expenses, including taxes and having insurance. So if I’m breaking even but appreciating by 4, 6, 8 percent or more per year, why not hold it? I’m sitting on a beach vacationing somewhere and making money.
For the properties in Denver, there’s a little bit more of set plan for those. I’ve got my two full R-2 lots, so I can build four units. They’re opening up a light rail train station, which is a line for commuters to get downtown, within walking distance of the properties in five years…and they’re just beginning to break ground. And so that was another reason that I liked this situation in Denver, that there were enough reasons that one way or another, I was not going to declare bankruptcy at the age of 24.
NuWire: As a young investor, how have you dealt with the challenge of financing multiple properties with little credit to work with?
Cohen: I just lost a deal in Denver about a month ago with the fallout of the sub-prime mortgage industry. It has gotten a hell of a lot more difficult, even for me.
I lived in my first property. So I was able to purchase that as an owner-occupant because I lived there for a while, to make that distinction very clear. But for my second property, I don’t have great financing terms, but they were acceptable to me. I’ve been able to put in a down payment. I’ve had five years of good credit, along with an excellent mortgage broker who’s been willing to find programs and go to bat for me with underwriters.
If somebody wants to do real estate, and they have an amazing deal tied up, the financing shouldn’t be a problem.
NuWire: Would you consider partnering with people in purchasing property?
Cohen: Business partnership is a tricky thing. And in many ways it’s worse than a marriage because there is tremendous quantifiable expectation, yet at the same time, zero emotional bond…It’s something to be done very cautiously with a very set business plan.
I would need to trust somebody with my gut to enter into business with them…Just to sit down and chat for an hour and make sure that our goals for the future for the property or for the business or whatever it is are exactly the same….I would be more inclined to work with a partner on [short term investments] than on longer term investments, just because on short-term projects, it’s easier to hash out exactly what you’re going to do and sign papers.
NuWire: Tell me about BuyMyBrokeniPod.com [now BuyMyTronics.com].
Cohen: I had just moved out to Denver and I was staying and partnering with a friend, actually looking for a real estate property. I had met Brett Mosley on Semester at Sea, which is a cruise ship that takes 600 college students around the world. And Brett’s iPod actually broke…And his warranty had run out because the average iPod breaks after 13 months and the Apple warranty runs for 12.
I’ve always been very entrepreneurially minded…finding the hole in any marketplace and then working backwards to fill it and make money.
Brett was going to trash his iPod. I said, “No. That’s an iPod Video,” and at the time they were going for something like $160 each on eBay—broken. And so we sold his iPod for more than we expected. And then we said, “Wait. If we can get more of these, we can make a business out of it.”
We started advertising on Craigslist…just to see if the business would work…And so, perhaps we took in 15 or 20 iPods in the next month.
Our next obstacle, where maybe a lot of people would get caught up or stuck, would be to find a way to take in iPods on a mass scale. And so we were able to partner with a graphic designer and with a computer programmer to create a great-looking website that handles everything for us.
As more established magazines and websites and so forth have featured the site, besides our business going up, our yield rate from the site has gone up because perhaps there’s a greater trust in us.
Some people have questioned…the market for broken iPods…but I disagree because one of the great things that we’ve been able to do is to fix more than half of the iPods that come in. If you search “broken iPod” in Google right now, we’re number two or three naturally [editor’s note: BuyMyTronics.com ranked number one as of Nov. 27]. The [November] issue of Mac|Life magazine…has the feature on the site.
One of the reasons that Brett and I split as business partners was that his first focus…was the website…and mine was real estate. I said, “Look, I want to do real estate. This business is great. Let’s outsource the business as much as we possibly can. It’ll cut down our profits, but it’s passive income. We can leverage that money ten times over in real estate.” And Brett said, “No. I want to grow this business for a year and see how big I can get it.” And he’s been doing a great job. He’s smart and business-minded and motivated.
There came a point in the business where our goals were not the same….It was a question of us sitting down and just having a reasonable face-to-face discussion about, “Where do we go from here?” And to find a situation that left us both be happy and also that left our friendship intact. And we were completely able to do that.
I have no doubt that with…the iPhone and future iPods and all of this publicity that he will expand the business tremendously. The website has changed its name [to BuyMyTronics.com] in order to include more types of broken electronics. It now buys broken video game consoles, cell phones and laptops, as well as the original broken iPods. [It] was featured in the New York Times recently.
If the business does get big…some people will look at me and say, “Well, that was kind of foolish to sell your share in the business.” But I say, “No. I’m happy and I’m living my life. I’ve got freedom, and that’s so important to me, especially at 24.”
