I had the honor of sitting down with Kata Walters (@Themodel.investor) and picking her brain about all things real estate. It isn’t often that you meet someone who has been incredibly successful in not one but two fields. Prior to entering real estate she was a working model in both Japan and New York. Recognizing that after 20 years she was on limited time as a model, she was able to reinvent herself and find another passion which she has excelled in - real estate investing. Check out her story. It is super inspiring and I took a ton away from it that I will apply to my own investing journey!
Kata Walters, a Model Turned Real Estate Investor
@MackofAllTradesNY: Tell me a little bit about yourself and your upbringing. Did you always know that you wanted to get into real estate investing? Or is that something that kind of came along later?
@TheModel.Investor: I grew up on a farm in rural New Zealand. I did not have a real estate related upbringing. When I left New Zealand at 17 I moved to Japan to be a model. I actually didn’t finish my last year of school. I wouldn’t say I'm a dropout like in the states because the system in New Zealand is different, but I could have gone another year and then gone to college, but I didn’t. I left home and moved overseas and started this modeling career.
It was awesome and crazy at the same time. Modeling careers are usually short, so I figured I’d go to college when I was done. Well, it turned into a 20-year career and, unfortunately, I wasn’t disciplined enough to go back to school during this time while I was traveling and modeling. I think it’s important to mention this because I know a lot of people who don’t have a degree and didn’t go to university who say, “I'm not formally educated so I’m not sure I can invest.” I did it and I didn't even finish high school. I believe anyone can get started in real estate and investing if they want to.
Throughout my 20’s I started making money and began to ask myself what do I do with it? If someone had told me to invest in real estate my whole life would have been different, but honestly I just didn’t know. My parents weren’t debt friendly, they didn’t have a mortgage on their house. They’re just like, “Put your money in a nice savings account because one day you’ll need it for something when you get married.” It was that kind of mindset. But I always had an eye for real estate. I remember when I was 22 or 23, I came home from a modeling trip. I remember driving down the main street in town and looking at an awesome commercial building. I wondered if I could turn it into apartments. I even met with a realtor and he said I think you could get plans done and probably make it into 4 apartments. I was 100% into it and then I think my parents kinda just talked me out of it because I really didn’t know anything about real estate at the time. It ended up being easier to not try it, I guess. Although I know it would have been amazing.
Photo Credit @Kata Walters
So time passed and I ended up moving to New York when I turned 30. I spent a lot of savings because I found it hard to find work there. It was also just so expensive and the money just evaporated. I eventually began to pick up work, but I was old for a model at this point. I had a couple of strong years and I'm like, alright, I don't have an education. I‘ve spent most of my money the first time, it’s time to get real about something. I knew I needed to start a business or figure out the stock market or something. And then it happened. I was at the dentist getting an expensive route canal which cost me a fortune. I was like what happens in 10 years when I need 3 or 4 root canals? It hit me, I don’t have a lot of savings. There was a Forbes magazine sitting next to me in the waiting room. One the cover it said, “Why You Should Invest in Rental Properties: Top Markets to Invest in Rental Properties in the USA.” I was like I wonder if I could get a rental property with this small amount of money I have saved and grow it to make extra money on the side? In modeling I was on borrowed time, so something just clicked. I spent the next few months, a short period of time, reading everything I could. After that it happened really quickly and the next thing I know I have a rental property. After I closed I could barely sleep because of the excitement, and I had finally found my purpose. I kept thinking, does everyone know this secret of passive income and getting tax exemptions and how it’s really easy?!? I felt like it opened this portal to a secret world. Why doesn’t everyone do this? And I started in the summer of 2016. I was late to the game. I’m 40 now but at the time I was 36. I was really late to the game but if I can do it, anyone can do it.
@MackofAllTradesNY: I agree, it’s never too late to start. What are some other excuses that you have heard that hold people back from jumping into investing?
@TheModel.Investor: I hear a lot. “Oh I don’t have a W2 job.” Neither did I. I was self-employed. “I don't’ have a degree'' or “My credit isn't great.” My credit was good but I had a short history because I had only been in the states 10 years. There were a lot of things going against me but when people tell me all these excuses like “I don't have money,.” I think they are just that, excuses. I had a small amount of money, just enough for a down payment. I really just don’t like excuses
@MackofAllTradesNY: Do you mind telling me about your first investment? Where was it and what drew you to it?
@TheModel.Investor: Sure! It was a little bit of a rookie move, but I got lucky in that it turned out ok. I was just googling, which I would not recommend, but I googled “best market to buy rental property in 2016” and Fort Worth Texas popped up. My boyfriend, now husband, lived in Austin so I thought I’ll look into Texas. It was random but property prices had been going up a lot. Little did I know it was a hot market and I paid the asking price. That was bad move number one. The second mistake was that I wasn’t working with an investor-friendly broker. She was lovely, but she was just someone who would represent buyers who were looking for single family homes. There was not a lot of numbers running and it didn’t have great cash flow. Luckily it was a newer property so there were no big expenses, or I would have been underwater at that point.
Kata Walters Investment Property
Luckily the property went up in value cause the market was just so hot. I got out of that property in 2019 because I thought that there was no way the market could continue like this, but it’s still going. I was able to sell it for a good profit and I reinvested more into the market that I’m investing now, which is Syracuse, N.Y. Now I’ve gone more in the affordable housing, lower-income, higher cash flow route. I started off buying for appreciation and not worrying too much about cash flow, where really it should be the other way around. Appreciation should be the cherry on top, really. As soon I closed I was like, “I can't wait to do more. What do I have to do now? I’ve been doing stuff the last 3 months and now I have nothing to do.” I loved everything about it. I love the underwriting process. I could not get enough. I just couldn’t believe how awesome it was.
I have to say if I had a day job, I wouldn't have given it up until I got to a certain point. I try to talk with a lot of newer investors and I try to tell them to take your time. There are pros and cons to keeping your W2 job for a while. We live off the rental income now because of necessity but we were living in New York and my husband was a photographer and I'm a model. Everything shut down when Covid hit. It wasn’t like we were thinking, “This is awesome let's go be financially free!” It was more like, “I guess now we have to live off the rental income because not much else is going on.” I began self-managing and when modeling work comes up, I'll take it extra income because it makes you look better on paper. The freedom is definitely nice, but don’t rush to give your job up
@MackofAllTradesNY: What is it that you look for in your rental units? What are you buying, where and why?
@TheModel.Investor: Syracuse, N.Y. is where I invest, right? I look at different markets though. I want to diversify where I am buying, but the thing is I have a team there and that's such a big pro, especially now that I self-manage. And the market is still doing well. Syracuse has experienced a lot of appreciation recently. Although New York had a strict moratorium, especially in the beginning, I've held steady because I have my team there and the cash flow is great. There's not many places where I can buy affordable properties right now and in Syracuse I’m not spending more than $35k a unit and these properties are renting for up to $1000/month. The ratio just blows every other market out of the water, even Rochester and the surrounding areas. I’m not sure why Syracuse has that but I like cash flow and it makes sense because I’m living off it now.
Kata Walter's Rental Property
There’s also a need for safe affordable housing in Syracuse. I have Section 8 and Catholic Charities calling me asking me if I have any properties. I feel bad that at the moment I don’t have anything available. It’s a shame New York has a lot of bad landlords and slumlords have a run of the city. A lot of those tenants end up in properties that are terrible, and this needs to change. There is still a stigma attached to Section 8. Some people say the tenants make a mess so we as landlords don't have to do anything. There is still a lot to do in Syracuse to clean that up. I feel socially responsible for changing the way landlords handle that stuff but I feel like I’m making a difference with what I’m doing at the moment and that feels good.
@MackofAllTradesNY: Do you do renovations or buy properties that are move-in ready? If you have done renos, have you ever tacked one where something has gone really wrong? How did you overcome it?
@TheModel.Investor: I’ve done a couple renovations but in the beginning I only bought turnkey homes. I initially bought nice places, in nice areas. Then I started to see that I could get some good deals if I put money into fixing them up myself. That really gave me a competitive edge in the market.
I did a flip last year on a 3-unit that had people living in it. The guy who owned it was behind on his mortgage and the whole place was covered in lead paint. There wasn’t really anything unexpected other than one guy who had an aquarium upstairs, it broke and leaked through the whole ceiling. That wasn’t in our budget but to be honest I personally haven’t had really a bad reno experience. There also was a nice single-family. I ended up flipping and selling last year after owning it for two years. The tenant living there ruined it, unfortunately. When it came time to turn the unit, it just made more sense to flip it and get the money back. That was not an intended flip initially though. It was a pivot plan.
Another one under contract!
@MackofAllTradesNY: Have you ever done a 1031 exchange?
@TheModel.Investor: Not yet. The cost of doing the 1031 exchange wouldn't have been worth it. Having said that, I did learn about opportunity zones last year. If you invest there it will offset the taxes, which is great. I purchased two properties in an opportunity zone last year.
@MackofAllTradesNY: Part of my blog is focused on helping women to get into real estate investing. Oftentimes it is more challenging as a woman to get started in this male-dominated industry. Do you have any advice for women who want to get started?
@TheModel.Investor: People weren’t taking me seriously in the beginning. I can’t decide if it’s the fact that I'm a woman or it’s my accent. Whenever I noticed someone not taking me seriously in the beginning I quickly made a list of anyone who didn’t get back to me that was it. I’m kind of hardheaded like that. I don’t have time for someone not taking me seriously. I thought I was very serious with my buying.
Interestingly last year I was looking for a larger multi-family with Josiah Snelzer. We had investors and I had to make these cold calls to off market owners. I had a hard time with that because I truly felt Josiah was better at this because he was a man. He told me that was not the case and that it was all in my head. He told me you just have to work on having the courage to do it. But I could hear it in their voices that they’d rather speak to a man. These were older gentlemen we were dealing with in Texas and Tennessee. While I’m good at what I do, it felt as though culturally they would have preferred to speak to a man.
I definitely feel there are a lot of positives about being a woman in real estate as well, though. I think we're more empathetic. I think we're better at conversation and we handle tenant relations better. There should be more women in real estate because we do a really great job. It’s still a very male-dominated arena, especially when we are looking for 100-plus units. When there is a lot more money involved, people are very serious. Oftentimes when a woman calls they never assume you’re the buyer, they always assume you work for someone who is. “No. I'm the buyer.” I say whenever they ask if I am the secretary of the real owner. Slowly it’s changing. With social media now it shows how many women are out there and doing really great stuff. We’re still outnumbered but the tables are really turning.
@MackofAllTradesNY: Do you find it hard to put yourself out there as a woman? I know I personally struggle with social media because it doesn’t feel natural to me yet.
@TheModel.Investor: My agency was always saying I needed Instagram. They told me to post cute pictures of me on the street or on set. I though it was dumb because I’m not helping anyone by taking photos of me on a bikini on a beach. Sure it gets a lot of likes and you can grow a following but I was uncomfortable.
With real estate I realized I could actually help people through social media and when used right, it can really help people. I’ve connected with so many people through it and I think the most important thing is just to be transparent. Talking and relaying what is happening at that moment and sharing the good moments and the bad moments is key to being authentic. You’ll get over it you just got to get into it. Also, I have found that the real estate community is really supportive and I don't find it competitive at all. Everyone willing to help and for nothing, which is awesome. Without social media I might not have found that community.
Model Turned Real Estate Investor
@MackofAllTradesNY: Do you have a mentor that has inspired you and if so, how did you meet them?
@TheModel.Investor: I didn’t have a mentor when I started investing and bought that property in Texas. I really did that 100% alone. Before investing in Syracuse, I didn’t know anyone in real estate, I didn’t know who to reach out to and my husband was supportive but he didn’t know a thing about real estate either. I was passionate about it though so I decided to just do it.
Looking into the Syracuse market taught me a lot. That’s when I met my broker Frank, who was also my property manager. Looking back now I asked him a lot of questions. He got me into Section 8 and he kind of moved me away from higher end markets into more riskier Class C neighborhoods. I don’t think I would have done that on my own. He also connected me with another investor who is now a big syndicator who I Interned with. Together two of them are mentors unknowingly. I have to give them credit for how much they helped me. I also try to do that now with people who reach out to me. I have a couple of investors I help when I can, hoping to pay that forward.
@MackofAllTradesNY: How many units do you currently have?
@TheModel.Investor: This last year I purchased 11 properties. That was crazy. I sold three too. Now I have 30 units total. I’m really beginning to realize it’s not really about how many units or how many properties you have, it's really about the process. I love pushing myself to acquire new properties in creative ways.
Mixed Use Investment Property
@MackofAllTradesNY: How do you keep yourself lendable as you grow your portfolio?
@TheModel.Investor: Maintaining good credit helps. I also like to use LLCs when getting mortgages. It’s less intrusive of an underwriting process and sometimes I get away with not having to show tax returns. It also helps to have a relationship with a local bank. I have four loans through a small bank and I know I didn't look right on paper, but they were able to help me anyways because of our previous relationship. I bought a 7-unit and purchased it last May during Covid. It was an expensive purchase for me so I talked to my broker and he said, “I’ll do this one for you, but then we have to let your other loans season because you literally bought 4 properties in the last 2 months. He pushed that through not as a favor because he knew I was doing a good job and making good purchases, but my debt to income ratio is starting to get higher.
Then I shifted to seller financing. I liked it because I didn’t have to take a hard hit on my credit and I could give it a breather. I also then started using private investment. The private lender I used only requires it to season for a month and just wants to see you have the down payment.
So there are many options. Don’t let it stop you. Plus, keep in mind a lot of smaller banks go off the deal. As soon as you get out of purchasing in your personal name, it’s not as hard. If things get tight, I offload properties. Use a lot of creative financing, especially if you are trying to scale. All those things combined with knowing your weakness and how to offset that. This was a challenge for me, I don’t look great on paper however I have a great investment business. Big banks wouldn’t touch me but all the little ones love working with me.
Well, there you have it folks! Kata began in 2017 and has already scaled her business to 30 units, most of which took place under Covid-19 restrictions! What I appreciate about her most though is her willingness to give back and share what she has done and how she has done it. She’s an incredible resource and super generous with sharing her knowledge so feel free to reach out to her @themodel.investor. I look forward to chatting with her again soon as she continues to build her portfolio!
Thank you, Kata!