117: Investing in Rental Properties While in San Francisco with Kathy Fettke

Kathy Fettke has seen a lot of ups and downs in the real estate market while living in San Francisco. She has bought rentals in San Francisco, but it can be really tough when almost every property costs more than one million dollars. After a health scare with her husband, she knew she had to find a way to create passive income while living in one of the most expensive markets in the United States.

She has learned to buy rentals and even develop land in other markets to create that passive income and wealth. Kathy has also become an expert at helping others invest in other markets for cash flow. She tells us all about how she got started in the real estate business, how she built passive income in the face of a crisis, and how she helps others build more cash flow from markets across the country. You can listen to it all on this episode of the InvestFourMore Real Estate Podcast.

How did Kathy Fettke get her start in real estate?

Kathy’s father was a dentist who also invested in real estate. In 1997, a property manager for one of her father’s properties sold the property without telling him! Her father needed to do a fast 1031 exchange with $500,000, so Kathy helped him pick a property in San Francisco that she and her husband could rent. Kathy ended up turning the house into a fourplex to help pay the rent, and her investing career began. Eventually, she inherited the property when it was worth $1.8 million. Kathy refinanced the property to finance other investments, but the market in San Francisco crashed, forcing her to sell the fourplex for a loss.

In 2003, Kathy’s husband was diagnosed with melanoma and wasn’t given long to live. Kathy and her husband decided to build as much passive income as they could so they could enjoy life and not work. Luckily, the doctors were wrong and her husband is alive and healthy today, but along the way, they bought many rentals and have created a fantastic life thanks to real estate.

What are good areas to invest in real estate in the United States?

Kathy has bought—and helped others buy—houses all over the United States. I asked her which markets she likes to invest in, and she mentions that markets that are not on peoples’ radar are usually the best to invest in. The prices have not been pushed up by speculation, and there is opportunity for cash flow and appreciation. Here are a few markets she talks about on the podcast:

• Cleveland: I own a turn-key rental in Cleveland myself, which has done well. Kathy likes Cleveland because of the medical industry in the area, and millennials are moving into the area.
• Atlanta: Atlanta used to have great cash flow, but the market has improved there. She thinks there are still areas that are great for rentals.
• Kansas City: I have had a few people on my podcast who were from Kansas City, and they also agreed the market was great for rentals.
• Detroit: Many people are scared of Detroit because of the huge crash in their real estate market. However, the city scraped many houses, and the market has improved greatly. Kathy warns that you need to know where to invest in Detroit, but there are a lot of great opportunities there.

How has Kathy invested in new construction projects and developments?

I tried to develop a minor subdivision last year on some land I bought. I ended up selling the land and making a profit, but I did not create a subdivision. The process to create a subdivision would have taken over a year and taken a ton of cash. I see why there is so little development going on in Colorado, even though we have one of the hottest real estate markets in the country. Kathy got into developing real estate by taking over subdivisions that were not quite finished but had most of the work already done. She let the original developer plat the land and get utilities in place, and when that developer ran out of money, she stepped in with other investors to take over the project. She talks all about the process and how she got started developing on the podcast.

How can you contact Kathy?

Kathy created The Real Wealth Network and the Real Wealth Podcast to help others learn how to invest in real estate. You can find a lot of information about her at realwealthnetwork.com and on her podcast.

Thank you for all the support for Hurricane Harvey victims!

For those of you who are on my email list, Facebook, or saw my post on helping the hurricane victims, thank you! I put all my books on sale, and over Labor Day weekend, I had close to $1,000 in sales that I will be donating to the area.