From Bankruptcy to 6 Figures – Interview with N Jason Lum Real Estate Investor and Project Manager at HMSA
Today I’m interviewing N Jason Lum, Real Estate Investor and Project Manager at HMSA. Back in 2013/2014 he filed Chapter 7 Bankruptcy and now he owns 6 properties and has a multiple 6 Figure Net Worth.
Let’s get inspired together =)
For those of you who want a quick overview, I summarized the questions and answers below (this is not a transcript).
1) Tell us a little more about yourself
I live in Honolulu, Hawaii, and I am a Project Manager at HMSA. I’m married but have chosen not to have kids. We have a Chinchilla, which is nice because when we want to sleep, we put him in his cage and he goes to sleep. You can’t really do that with kids.
2) How did you end up declaring bankruptcy and what did you do to pull yourself back up and become a successful investor?
So my friend and I opened a coffee shop back in 2009 in Puck’s Alley, the University area near UH Manoa. In hindsight, we didn’t really make a business plan so it’s not surprising we didn’t do well. We thought that College students would want to come, drink coffee and study. They didn’t. We ended up losing money every month, and I would put in personal money to cover the loss. When we finally closed the coffee shop in 2013/2014 I was over $40,000 in debt.
I wanted to declare bankruptcy to have a clean slate. It wasn’t the amount of money really, I just knew that debt was from the business and when I closed down the business I wanted the debt to be taken care of too. It almost wasn’t enough to declare Chapter 7 Bankruptcy, according to my lawyer.
I’ve always thought of myself as an entrepreneur, so I was looking for other ways of doing business that interested me. I was interested in learning more about real estate so I took a class in real estate investing, and learned how to do it. I now own 6 properties.
3) What advice would you give to someone who is in debt and/or wanting to improve their finances?
Take a class and get a coach to teach you what you want to learn. For me, I wanted to learn real estate investing so I took a class in that. A coach is someone who has done what you want to do. They can show you what you are doing wrong and help you learn.
4) You said some of your investing creates passive income, can you give us an example of a passive income investment that you have?
One of our properties, I bought with a partner. It gives us $50/month each in passive income, which isn’t a lot I know. It is a rental. It also has appreciated in value as well. We bought it because we were selling another property and didn’t want to be taxed on the capital gains, so we did a 1031 exchange. The true value is the property’s appreciation.
Another property I have is an AirBnB I bought for $300,000 in a condo hotel in Waikiki. I have a property manager who runs it and handles the cleaning, paying the taxes and everything. So that is really passive. I make $1,000/month on that property.
5) I know many people respect you and I’ve only heard good things about you, and I heard you mention that what you do takes a lot of discipline. Can you talk more about that? How did you become disciplined enough to turn your financial situation around? What are you disciplined about?
I just spend less than I make. This is basic common sense. I guess when people don’t follow these basic common sense principles with money they are having a block of some sort.
When I decided to close down my coffee shop, I was taking PSI seminars, and in the seminar I realized that I needed to cut my losses and let that coffee shop go.
Then I removed that block and opened myself up for better investing opportunities. Sometimes you need to take a personal development seminar, or have someone like a coach help you through mental blocks that might be holding you back.
6) Final question, you told me you’ve made a lot of expensive mistakes, haven’t we all? What do you do when you’ve made a mistake, how do you rise up again and push through to better opportunities?
I had a lot of negative feelings about my failed business. It was hard to face the fact that I failed. I think most people just numb themselves to the pain. I faced the pain, so that I could feel what I had to feel and move on.
The next thing I do is I find the lesson from the pain. I think of the $40,000 and the pain as the tuition to the lesson of not jumping into businesses quickly. I now do my due diligence. The pain helps me remember that lesson, if that makes sense.
7) You said you were looking for partners to invest in properties, people with cash but don’t know how to find good deals. Do you have a way for them to get in touch with you if they want more information?
You can find me on instagram @njasonlum808. What I would do is private money loans. You can loan money to my company, it will be backed by a personal guarantee or it will be backed by real estate, meaning a 1st lien on the property. I think the yield right now is 10%. Then I look for the property, and do all the work. You would need to put up the cash and we can give you a 10% return on your money. You need to have at least $50,000 to work with me to find a property.
In Conclusion
The housing crisis has shaped our generation and we are now more aware of investing and the risks involved in real estate. I never recommend getting a 2nd mortgage. I also always look for 2 ways to make money in a deal, either through renting or by selling. I want to make sure both options are available in case I need an exit.